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Technology 

and 
orld Trade 



PROCEEDINGS OF A SYMPOSIUM 



U.S. DEPARTMENT OF COMMERCE / NATIONAL BUREAU OF STANDARDS 

NBS MISC. PUB. 284 




,1111 



' , I" J " 




Technology 

and 
World Trade 

PROCEEDINGS OF 
A SYMPOSIUM 

November 16-1 7, 196B 



Sponsored by the 

Secretary of Commerce of the United States 

on the Occasion of the Dedication of the 

New Laboratories of the National Bureau of Standards 

at Gaithersburg, Maryland 



U.S. DEPARTMENT OF COMMERCE 
John T Connor, Secretary 



NATIONAL BUREAU OF STANDARDS 
A. V. Astin, Director 



Edited by 
Robert L. Stern 



National Bureau of Standards Miscellaneous Publication 284 Issued 1967 
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 - Price $1.25 



Symposium on 
TECHNOLOGY 
AND WORLD TRADE 

Sponsor: John T. Connor, Secretary of Commerce 

Committee: J. Herbert Hollomon 

Alexander B. Trowbridge 
Irl C. Schoonover 

Program Chairman: Robert L. Stern 



The Symposium Committee is grateful to the NBS Statutory Visiting Committee 
for their help and to the following firms and foundations which made possible 
many of the activities of the Symposium and NBS Dedication. 

Firms and Foundations: Boeing Company, Corning Glass Works, Dow Chemical 
Company, Eastman Kodak Company, E. I. du Pont de Nemours & Company, 
Firestone Tire and Rubber Company, Ford Motor Company, General Dynamics 
Corporation, General Electric Company, General Mills, Inc., General Motors 
Corporation, Gulf Oil Corporation, Hewlett-Packard Company, International 
Business Machines Corporation, International Telephone and Telegraph Cor- 
poration, Litton Industries, Merck, Sharp & Dohme Company, Inc., Polaroid 
Corporation, Radio Corporation of America, Alfred P. Sloan Foundation, Stand- 
ard Oil Company of New Jersey, Texas Instruments, Inc., Union Carbide Cor- 
poration, United States Steel Corporation, Westinghouse Electric Corporation, 
Worthington Corporation, Xerox Corporation. 

NBS Visiting Committee: Dr. E. R. Piore (IBM) Chairman, Professor Norman 
F. Ramsey, (Harvard), Dr. Elmer W. Engstrom (RCA), Dr. Paul C. Cross (Mellon 
Inst.), and Dr. Robert L. Sproull (Cornell). 



Symposium Program 

and 

Table of Contents 

November 16, 1966 

INTRODUCTION: Dr. J. Herbert Hollomon 2 

Assistant Secretary of Commerce for Science and Technology 

OPENING STATEMENT: Mr. John T. Connor 5 

Secretary of Commerce 



Morning Session — Technology: Its Influence on the Character 
Of World Trade and Investment 

Chairman: Dr. Frederick Seitz, President 7 

National Academy of Sciences and National Research 
Council 

Speakers: Professor Marshall McLuhan, Director 9 

Center for Culture & Technology, University of Toronto, 
Toronto, Canada . 

Professor Richard N. Cooper 15 

Department of Economics, Yale University, New Haven, 
Connecticut 

Discussants: Dr. H. B. G. Casimir 22 

Director of Research Laboratories, N. V. Philips Indus- 
tries, Eindhoven, The Netherlands 

Mr. John E. Reynolds 25 

Board of Governors, Federal Reserve System, Washing- 
ton, D. C. 

Questions from the Floor: 

Dr. Melville Green 27 

Prof. V. K. R. V. Rao 28 

Mr. Charles Vetter 29 



Comments: 



Dr. Seitz, Professor McLuhan, Professor Cooper, Mr. Reynolds 
— Pages 27-30 



Luncheon Program 

Introduction: Mr. Herman Pollack 31 

Director of International Scientific and Technological 
Affairs, Department of State 

Speaker: Mr. Pierre Uri 34 

Counselor for Studies, Atlantic Institute, 
Paris, France 

Address: INTERNATIONAL COMPETITION AND COOPERATION 
IN TECHNOLOGY 

iii 



Afternoon Session — The Impact of International Measurement 

Conventions, Norms and Standards on World 
Trade 

Chairman: Dr. A. V. Astin, Director 37 

National Bureau of Standards 

Speakers: Mr. Francis McCune 39 

Vice President, General Electric Company, New York, 
New York 

Mr. A. H. A. Wynn 44 

Head, Standards Division, Ministry of Technology, 
London, U.K. 

Questions from the Floor: 

Mr. Leon Podolsky 52 



Comments: 

Dr. Astin, Mr. Wynn, Mr. Sharpston — Page 52 

Discussants: Mr. Fayvel Hadass 53 

Director, Standards Institution of Israel, Tel Aviv, Israel 

Mr. Francis L. LaQue 55 

Vice President, International Nickel Co., Inc., New York, 
New York 

Mr. Samuel H. Watson 58 

Manager, Corporate Standardizing, Radio Corporation 
of America, Camden, New Jersey 

Mr. C. H. Sharpston 61 

Secretary-General, International Organization for 
Standardization, Geneva, Switzerland 



Banquet Program 

Chairman: Mr. John T. Connor 65 

Secretary of Commerce 

Speaker: The Vice President of The United States 

Honorable Hubert H. Humphrey 67 

Address: TECHNOLOGY AND HUMAN BETTERMENT 



IV 



November 17, 1966 

Morning Session — The Impact of the Policies of Government on 
the Creation and Use of Technology for 
Economic Growth 

Co-Chairmen: Dr. Donald F. Hornig 73 

Special Assistant to the President for Science and 
Technology 

Dr. J. Herbert Hollomon 83 

Assistant Secretary of Commerce for Science and 
Technology 

Speakers: Mr. Robert Major 76 

Director, Royal Norwegian Council for Scientific and 
Industrial Research, Oslo, Norway 

Mr. Peter G. Peterson 83 

President, Bell & Howell Company, Chicago, Illinois 

Discussants: Professor James Brian Quinn 98 

Dartmouth College, Hanover, New Hampshire 

Professor V.K.R.V. Rao 104 

Member, Planning Commission, Government of India, 
New Delhi, India 

Questions from the Floor: 

Dr. Hendrik Casimir 108 

Mr. Rodney Meyer 109 

Mr. M. Zvegintzov 109 

Dr. Paolo Rogers 109 

Comments: 

Dr. Hollomon, Mr. Major, Professor Quinn — Pages 107-109 



Luncheon Program 

Introduction: Mr. Alexander B. Trowbridge 111 

Assistant Secretary of Commerce for Domestic and 
International Business 

Speaker: Dr. Ibrahim Helmi Abdel-Rahman 113 

Commissioner for Industrial Development, 
United Nations, New York, New York 

Address: TECHNOLOGY AND THE DEVELOPING COUNTRIES 



Afternoon Session — The Transfer of Technology Through 

Enter prise-To-Enterprise Arrangements 

Chairman: Professor Hollis B. Chenery 119 

Department of Economics, Harvard University, 
Cambridge, Massachusetts 

Speakers: Mr. Elmer S. Groo 121 

Vice President, IBM World Trade Corporation, 
New York, New York 

Dr. Aurelio Peccei 126 

Chief Executive, Ing. C. Olivetti & C, S.p.A., Ivrea, Italy 

Questions from the Floor: 

Mr. Miguel Wionczek 132 

Prof. L. Rey 134 

Dr. M. Kersten 134 



Comments: 



Professor Chenery — Page 132 



Discussants: Dr. John H. Dessauer 136 

Vice President, Xerox Corporation, Rochester, New York 

Dr. L. R. W. Soutendijk 138 

Manager, Brown Bros. Harriman & Company, New York, 
New York 

Dr. Antonie Knoppers 141 

President, Merck, Sharp & Dohme International, 
New York, New York 



CLOSING REMARKS: 

Mr. John T. Connor 144 

Secretary of Commerce 



APPENDIX: 

List of Participants in the Symposium 145 



VI 




A Symposium: 



■ To examine and forecast the impact of technology upon the patterns and 
conduct of international trade and investment 

■ To consider the international environment needed for the wider generation 
and utilization of technology 

■ To explore prospects for evolving policies and institutions that promote 
economic development through technology and trade 



November 16, 1966 



INTRODUCTION 



Mr. Stern: Mr. Secretary, Honored Guests, Ladies 
and Gentlemen: Good morning to you on this brisk 
fall day. 




ROBERT L. STERN 

Program Chairman 

Chief, Office of Industrial Services 

National Bureau of Standards 

The ship "Technology" is about to set off on a 
round-the-world cruise. Our adventure and explora- 
tion during the next two days takes the form of a 
symposium which, to recall the definition of the 
Greeks, means: a feast, a gathering together with 
free exchange of ideas, a drinking together. Each 
aspect of this definition will have its place in these 
proceedings. 

Now, to get under way, and to introduce the 
Sponsor of the Symposium and later the Chairman 
of this morning's session, I would like to present Dr. 
J. Herbert Hollomon, Assistant Secretary of Com- 
merce for Science and Technology. 



Dr. Hollomon: Honored guests, friends from Wash- 
ington, New York, Delhi, Madrid, Ottawa, Paris, 
and Manila and a dozen other world capitals, wel- 
come! One of every six or seven of us is a visitor to 
the United States. At least 25 nations are represent- 
ed here. 

No matter where you came from, technology 
helped bring you here. Many of you used jet air- 
planes. All of us used automobiles or buses. Trans- 
portation technology contributed to bringing us 
here, I hope quickly, comfortably and safely. 

We are meeting in facilities built with a great deal 
of technology and we are using the products of tech- 
nology to hear and see and record our findings. The 
specific occasion which brings us together is the ded- 
ication of this magnificent new facility. We are also 
commemorating the sixty-fifth anniversary of this 
great scientific and technological institution — the 
National Bureau of Standards, an agency of the 
United States Department of Commerce. 

We all owe a debt to technology. We can partially 
repay that obligation by making our two-day discus- 
sion effective, pointed, stimulating, and helpful to 
one another. 

We planned this symposium so that you will have 
ample opportunity at each session for questions 
from the floor. We are also providing two luncheon 
sessions and a banquet and at that banquet the 
Vice-President of the United States will speak to us. 
We hope that will encourage you to recognize that 
this is a symposium of people talking together, rather 
than a few of us talking to all of you. 

We believe that technology, appropriately under- 
stood, morally and ethically applied, is the best hope 
for a peaceful, prosperous society. Technology does 
not automatically flow to where it is needed. It is 
necessary that men spend their wills and their hearts 
to bring technology to people in a way that will con- 
tribute to their progress, their health, and their well- 
being. 

For the opening remarks on these subjects, we are 
privileged to hear the Sponsor of this conference, 
the distinguished Secretary of Commerce of the 
United States, the Honorable John T. Connor. 




J. HERBERT HOLLOMON became Assistant Secretary of Commerce for Science 
and Technology in May 1962, having been nominated by President Kennedy and 
confirmed by the Senate. In this position he supervises the Patent Office; the Na- 
tional Bureau of Standards; the Environmental Science Services Administration; 
and the Office of State Technical Services. 

He also is the principal advisor on scientific and technical matters to the Secre- 
tary of Commerce, and he is a member of the Federal Council for Science and 
Technology, consultant to the President's Science Advisory Committee, and Chair- 
man of the Interdepartmental Committee for Atmospheric Sciences. 

Dr. Hollomon was with the General Electric Company for 18 years, as metallur- 
gical researcher, Manager of Metallurgy and Ceramics Research, and General 
Manager of the General Engineering Laboratory. 




JOHN T. CONNOR was nominated Secretary of Commerce by President Johnson 
on January 6, 1965, and confirmed by the U.S. Senate on January 15. He assumed 
his cabinet post after a career of law, government and industry, which spanned a 
quarter of a century since his graduation from Harvard Law School in 1939. 

He is a graduate of Holy Rosary High School in Syracuse, New York; of Syra- 
cuse University where he received his A.B. degree, magna cum laude; and Harvard 
Law School where he received an LL.B. degree in 1939. Mr. Connor then was 
associated for several years with the New York City law firm of Cravath, de 
Gersdorff, Swaine and Wood. 

In 1942, Secretary Connor was appointed General Counsel of the Office of 
Scientific Research and Development, of which Dr. Vannevar Bush was Director. 
In 1944, he went on active duty with the U.S. Marine Corps, serving in the Pacific 
as an air combat intelligence officer. Returning from Japan in 1945, he became 
Counsel to the new Office of Naval Research, and later, Special Assistant to Secre- 
tary of the Navy James Forrestal. 

Mr. Connor joined Merck & Co., Inc., in 1947 as general attorney and held 
several other key executive positions before being elected president of the company 
on September 27, 1955. In February 1967, Mr. Connor returned to private in- 
dustry and became President of the Allied Chemical Corporation. 



OPENING STATEMENT 

Technology and Management As Instruments of World Progress 



Secretary Connor: Thank you, Dr. Hollomon. Hon- 
ored guests, ladies and gentlemen: I am pleased to 
welcome all of you to this symposium on technology 
and world trade. Many of you have come a great 
distance to participate in this dialogue. I am 
confident that when we are finished our efforts will 
be repaid with a clearer view of the common prob- 
lems we face in the global exchange of goods, serv- 
ices, commodities, knowledge, attitudes, and ideas. 

At the dedication of these magnificent facilities 
yesterday, President Johnson sent a special message 
of greeting. He noted that the symposium would 
open here today and expressed his confidence that 
the ideas emerging from this symposium will provide 
a fresh insight into the task of creating a life of 
abundance for people everywhere. Technology and 
world trade are vital elements in the economic life 
of all nations in the shrinking world and accelerating 
times of today. 

The National Bureau of Standards and 
the Department of Commerce 

This symposium is especially appropriate at this 
time, coinciding with a momentous event in the his- 
tory of the National Bureau of Standards. The De- 
partment of Commerce is charged with helping 
create those conditions which will encourage and 
stimulate the growth of the national economy. The 
National Bureau of Standards is a charter member 
of the Commerce Department, having joined us 
when the department was established more than half 
a century ago. NBS is also the nation's measurement 
laboratory, our spokesman in the international lan- 
guage of science, a center of research, technology, 
and its application. 

The dedication of these new laboratories occurs 
as the Bureau is placing increased emphasis on sev- 
eral fruitful areas of cooperation with American 
business and industry. International standardization 
of industrial products, the development of perform- 
ance criteria for technological goods and services, 
methods for measuring the performance of entire 
systems, and the dissemination of scientific data and 



technical information — these activities all have great 
relevancy to international trade. 

From the earliest days of its planning, I have 
sensed an air of excitement about this particular 
symposium. For this reason, I don't want to delay 
your exchange of ideas and opinions for one minute 
longer than necessary. In this setting, sequestered 
from the day-to-day considerations of immediate 
problems, perhaps we can suspend the old dogmas 
and construct an edifice of new ideas, beginning 
from the ground up. I would like to take a few 
minutes at the beginning to examine with you some 
of the foundation stones on which your dialogue can 
be based. These fundamental notions are axiomatic 
to the specialist. To a nonspecialist, such as myself, 
they sometimes provoke more questions than they 
provide answers. 

Purposes of the Symposium 

This symposium has three purposes: First, to 
look at the impact of technology upon international 
trade and investment. Second, to outline a world en- 
vironment which will encourage more widespread 
use of technology. And, third, to seek new ways for 
technology and trade to promote economic develop- 
ment. 

These objectives combine to create a formidable 
challenge. Fortunately, you and your speakers are 
admirably qualified to come up with constructive 
answers. 

Fortunately, our constitution created a union of 
states and precluded any attempts to raise trade bar- 
riers between one state and another within the Unit- 
ed States. As a result, this early common market 
grew into a mass market with economies of scale 
which contributed immensely to our economic 
growth and our technological development. 

In spite of this favorable environment, however, 
we have not yet achieved a nationwide parity in 
standards of living or in the level of technological 
development. The Appalachian region of America 
stands in stark contrast to areas on the East and 
West Coasts, both economically and technologically. 



Through our system of agricultural colleges, re- 
search stations and farm specialists scattered 
throughout the nation, the dissemination of the lat- 
est agricultural technology has become a successful 
reality in this country. We have not yet been so suc- 
cessful in the manufacturing and service sectors of 
our economy. Studies conducted by the Commerce 
Department show that there is a wide area of 
difference, a wide range of difference, between the 
most efficient and the least efficient plants in any 
given industry. This pattern exists regardless of the 
size of the plant, and this condition is true whether 
it is a labor intensive industry or a high technology 
industry. In some industries, the value added per 
employee in the most efficient plants is five hundred 
percent above the amount for the least efficient 
plants. 

Think of the competitive advantage this offers the 
top firms. Or on the other hand, think of the waste 
in human and material resources among the lowest 
firms. These efficiency gaps include many compo- 
nents — management skills, availability of capital, 
marketing know-how, participation in world trade, 
condition of plant and equipment, flexibility of labor 
and management, ability to utilize the latest technol- 
ogy, and many, many others. 

Our economists estimate that if all companies in 
all industries followed the most advanced practices 
and techniques of the most efficient companies, the 
growth in national productivity would greatly exceed 
the growth rate of recent years. Practically speaking, 
this may be expecting too much, but it is clear that 
there exists a great potential for improvement. 

Opportunities for Better World Use 
for Technology 

Looking at the broad problems of technology and 
trade from a global point of view, what needs to be 
done? More to the point, what can be done? 



First, there are some institutional goals we could 
work toward. These include such things as greater 
participation by all countries in the development of 
international standards for industrial products, an 
accelerated and more broadly based movement to- 
ward some form of international patent cooperation, 
an unfettered flow of capital among nations with due 
provision made for special circumstances and special 
cases, the reduction and elimination of barriers to 
trade on a fair and reciprocal basis, wider availabil- 
ity and movement of technology among nations. 

Second, we need to change our approach to the 
fact that there are differing levels of technology in 
various fields among the nations of the world. Our 
thoughts and actions should not be directed toward 
compensating for these differences artificially. 
Rather we should try to assure that each nation has 
access to the particular technology most appropriate 
to its own goals as defined by that nation. In this 
way, trade and economic growth will both be en- 
hanced. 

Third, we need to know more about the processes 
of technology, trade and economic growth, how they 
interact, why a certain formula succeeds for one 
country and fails in another. Toward this end, the 
United States has joined with the member nations of 
the OECD in a major study of the processes by 
which nations are able to develop and exploit 
science and technology for the attainment of eco- 
nomic and other national goals. 

The results of this study should be useful to all 
nations and applicable to all levels of development. 

Can these objectives be realized? I don't know of 
any substantive reason why they cannot, if we have 
the will to succeed and a willingness to cooperate. 
The United States stands ready to join with all other 
countries in efforts to disseminate and use the 
knowledge of mankind for the benefit of mankind. 



November 16, 1966 



Morning Session — Technology: Its Influence on the Character of 
World Trade and Investment 



Dr. Hollomon: I should now like to introduce to 
you Dr. Frederick Seitz, the President of the Nation- 
al Academy of Sciences, who will be the chairman 
for this morning's session. 

Dr. Seitz: Thank you, Dr. Hollomon. Our session 
deals with technology in world trade, as has been 
made clear. I would like to say a few words of intro- 
duction about both. 

Technology in Human History 

Man is innately a technologist — inherently inven- 
tive. This characteristic is part of his birthright 
and is linked intimately with the constitution of his 
genes. The long road of evolution of our species 
over the past million years is in fact littered with 
the products of our inventive technology. There is 
much direct evidence for the crude tools of stone 
our forebears have produced and much indirect 
evidence for those made of wood and bone. 

When our species emerged about 50,000 years 
ago with its present genetic make-up, more sophisti- 
cated devices appeared, including arrows, spears, 
axes, hooks, nets, and intricately woven objects. 
The basic genetic equipment which made us tech- 
nologists is well known. This includes manual dex- 
terity, stereoscopic vision and the ability to reason. 
Armed with these attributes and the willingness to 
focus attention on issues of immediate practical 
importance, our antecedents moved ahead, first as 
hunters and food-gatherers and then, about 10,000 
years ago, as agronomists. Five thousand years ago 
we became masters of the great river valleys which 
yielded such riches that it became possible to develop 
professional specialization, including most of the 
fields of modern engineering. 

Between one thousand and fifteen hundred years 
ago those of our ancestors living in Northern Europe 
learned to cultivate the soils of the temperate climate 
and to develop the technology associated with that 
climate. This advance in technology, in turn, made 
the urban revolution possible in northern latitudes. 
Without such a revolution the settling of North 
America would have been of little meaning to man- 



kind, except for the access the discoverers might have 
had to the natural raw materials of the new land. 

Science Revolutionizes Classical Technology 

About 500 years ago, the earnest, practical phil- 
osophers of Western Europe conceived of an entirely 
new basis for technology. Inspired by access to the 
manuscripts of Greek science, they conceived of 
establishing a new form of technology which would 
extend well beyond the scope of classical technology 
and which would rest upon investigations of the 
basic laws of nature. In brief, they recast ancient 
science into a new form and evolved what we now 
call modern science — a process designed to gain 
knowledge of nature characterized by the careful 
interplay of observation and theory. It took time 
for the dream of these philosophers to be realized. 
However, starting about 170 years ago with the 
dawn of the age of modern chemistry — a product 
of the scientific method — a great scientific revolu- 
tion in technology was set into motion. It is easy 
to show that by the present time technology would 
have been running out of momentum if it did not 
have the contributions of science. By the end of this 
century the methods of classical technology would 
have proved to be stagnant. 

The Impact of Trade on Technology 

Historically, as Secretary Connor pointed out so 
eloquently, the evolution of technology has been 
very closely coupled with the development of trade. 
Once man became a trading animal, as he did very 
early — at least 10,000 years ago — he began to trade 
technology along with material objects. This not 
only stimulated his own process of technical innova- 
tion, but also made him aware of the importance 
to his own welfare of the acquisition of alien meth- 
ods of technology. The interchange of technology 
has in fact been as important a component of trade 
as the interchange of material products. Trade not 
only brought British tin to the Mediterranean, but 
stimulated the entire technology of producing tin 
alloys. The trade with China, initiated by the Chi- 




FREDERICK SEITZ is the first full time President of the National Academy of 
Sciences, a position to which he was elected in 1965 for a six-year term. He served 
the previous three years on a non-resident basis while continuing his affiliation with 
the University of Illinois. There he was most recently Dean of the Graduate Col- 
lege and Vice President for Research. Earlier he headed the Physics Department 
for seven years, following an extended period as Research Professor of Physics. He 
taught at the Universities of Rochester and Pennsylvania, and at Carnegie Institute 
of Technology. He also spent two years with the General Electric Company. 

Dr. Seitz, a native of San Francisco (1911), California, received his A.B. in 
Mathematics from Stanford University (1932), earning his Ph.D. in Physics at 
Princeton two years later. 

Dr. Seitz is presently a member of the President's Science Advisory Committee 
and of the Statutory Visiting Committee for the National Bureau of Standards. 

Dr. Seitz is Vice President of the International Union of Pure and Applied 
Physics, and a member of the Committee on Science and Technology in Develop- 
ing Countries of the International Council of Scientific Unions. 



nese, not only brought Chinese textiles and ceramics 
to the West, but stimulated a host of parallel devel- 
opments in the corresponding fields of technology 
in the Mediterranean. Our own trade with Europe 
and Asia accelerated our national development not 
only through the import of materials, but also by 
stimulating our own technology. Our own techno- 
logical advances have, in turn, had a very deep 
influence on the parts of the world with which 
we trade. 

Technology based upon science developed very 
slowly in our country. It was, in fact, only in this 
century that we accepted broad responsibility for 
generating science-based technology. Earlier in our 
history we were in the main acquirers of products 
or of licenses stemming from science-based tech- 
nology generated elsewhere. Interestingly enough, 



the stimulus for the reform came less from scientific 
scholars than from the leaders of industry who de- 
sired to make their products competitive throughout 
the world. In fact, the establishment of the great 
industrial laboratories, such as those of the General 
Electric Company, the Bell Telephone Company, 
and du Pont, near the turn of the century can be 
regarded to represent the dawn of a genuinely new 
era in our own technological history. 

If one tries to characterize the various phases in 
our history of creative technology, one can perhaps 
say that our period of innovation in the pattern of 
classical technology reached its climax in the era of 
Thomas Edison. The revolution associated with the 
computer is the first major product of our creative 
association with science-based technology. 



?SSS3»5S3SS3SS5 



Dr. Seitz: With this background of historical obser- 
vations on man's relationships with technology and 
trade, I would like to introduce our next speaker on 
the morning session, Dr. Marshall McLuhan. Dr. 
McLuhan is Director of the Center for Culture and 
Technology of the University of Toronto, Canada. 



Dr. McLuhan: Mr. Secretary and ladies and gentle- 
men: The environment you have provided for us 
makes an occasion to relate to you one of our Cana- 
dian cultural products — French-Canadian grievance 
humor. Have you ever noticed that good jokes tend 
to record grievances? The grievances of the French- 
Canadians have been much related to the electronic 
age, in which they feel a new need for separation 
and decentralism, and some of the stories that go 
with that are of this grievance type. 

A mouse is being pursued around the house by 
the cat and finally discovers a hole in the wall where 
it hides. And then all is silent until a kind of bow- 
wow, arf, arf, sound is heard. The mouse figures the 
house dog has come along, scared the cat away, and 
ventures out. The cat grabs it and as the cat chews 
the mouse down, it says, "You know, it pays to be 
bilingual." 



Another Canadian contribution to this grievance 
humor is the sign that hangs over a junkyard in To- 
ronto which reads, "Help beautify junkyards. Throw 
something lovely away today." 

It is a very rich observation. 

There are quite a lot of these grievance stories, 
which are rather instructive, but I am going to ven- 
ture a few themes here in relation to our very rich 
subject of technology and world trade. 

The New Environment for Man 

I suppose one could simply sum the whole thing 
up and say that any economy is an information pool 
and, under electronic conditions, the world is a sin- 
gle information pool; therefore, there can and must 
be just one economy. As the world becomes a total 
information pool, and therefore simultaneous, the 
natural tendency is for all the older patterns and 
barriers and structures to be swept aside. 

I think one might safely predict, for example, that 
with the coming of the satellite environment for our 
planet, the planet is no longer the human habitat. 

The planet is now the content of a man-made en- 
vironment of electric information and satellite infor- 
mation. When the planet itself goes inside a man- 
made environment, the planet becomes as it were, 
an old nose cone, an art form. Every time a new 










MARSHALL McLUHAN is Director of the Center for Culture and Technology at 
the University of Toronto. Prior to this, he was Professor of English at that Uni- 
versity's St. Michaels College, and earlier held teaching assignments at Wisconsin 
University, St. Louis University and Assumption College. 

A native of Edmonton, Alberta, Canada, Dr. McLuhan obtained his Bachelor's 
and Master's Degrees in Arts from Manitoba and Cambridge Universities, then 
receiving his Doctor of Philosophy degree at Cambridge in 1943. 

Dr. McLuhan is the author of several books, including "The Mechanical Bride: 
Folklore of Industrial Man," "Understanding Media" and "The Gutenberg Gal- 
axy." He has in addition contributed to numerous periodicals including "Daeda- 
lus," the "Kenyon Review" and other literary magazines. 



J 



environment of any sort goes around another one, 
every time a new technology creates a new environ- 
ment, that environment goes around the environ- 
ment of the preceding technology, turning the old 
technology into an art form. 

Environments need to be understood as processes. 
They are not containers, they are processes. So 
when the TV environment went around the old 
movie environment, the movie industry became in- 
creasingly an art form. The process of the TV sur- 
round has turned increasingly the old movies into 
art form, and this now is happening to TV itself 
with the satellite environment going around TV. 

I suppose, too, it is natural to observe that in the 
age of the circuit, the electric circuit, with its feed- 
back and folding back into itself, we have come to 
the end of the neolithic age, the age of the planter, 
the strip culture, with each person mining his own 
bit of knowledge. With the diffusion of knowledge 
instantaneously, in all sorts of patterns simultane- 
ously, a great diversity of patterns, we have come to 
the end of the neolithic time. 

But the strange thing is this, that we have flipped, 
as it were, back into the age of the hunter. The 
electronic age is once more the age of the hunter, 
only it is now the hunt for information, for data. 
The image of Sherlock Holmes and of James Bond 
offers (again) the age of the hunter. 

Reversals and the World Information Pool 

This aspect of our time merely points to a 
number of other reversals and flips that are upon us 
technologically. 

For example, with the coming of xerography and 
electric circuitry to the book trade, a typical type of 
reversal that is manifest in many other fields has set 
in. Instead of the book being a repeatable commodi- 
ty, a package — and it was the printed book that was 
the first uniform, repeatable commodity, making 
possible markets and prices as we know them — the 
book tends to be an information service. 

The book can be programmed for the individual 
request — tailor-made, custom built. The tendency of 
circuitry and electronic movement of information is 
to break up the old patterns of mass production and 
uniformity into the custom-built service. 

As we create these new and revolutionary situa- 
tions, it is typical that we go on talking about the 
old situation as if it were still the dominant one. 

With xerography as a service, it is possible, for 
example, to form an electrical information center. 
Say I am working on Egyptian arithmetic and 



I would like all the most recent material. I read such 
and such, I know such and such languages, and in a 
few minutes or hours, a package is gathered from all 
the libraries in the world and can be delivered to my 
door. The book is becoming, with the aid of the 
computer and the telephone and Xerox, a complete- 
ly flexible service. 

This pattern, for example, as it enters the world 
of education, means that instruction in the older 
classroom sense will tend to yield, as it is already 
yielding, to discovery as a technique of learning. 
The older pattern of imposing knowledge or instruc- 
tion upon the young is steadily yielding to the pat- 
tern of discovery as a means of learning. 

Our dropout situation is not unrelated to this. 
Many children have the feeling that by being sent to 
school, their education is being interrupted. 

Because we — literally — live in a world in which 
the outside environment is far richer in information 
than the schoolroom. 

Pattern Recognition and Information Overload 

Jacques Ellul, the French philosopher of technol- 
ogy, observes that: "The Twentieth Century child is 
engaged from morning to night processing data, on a 
massive scale." You might ask yourself, what hap- 
pens when we subject children to massive doses of 
man-made environment, what happens to their out- 
look, their inlook and their outlook? 

One thing that happens is that under conditions 
of informational overload, which is normal, they de- 
velop patterns of mythic thinking, because it is only 
by mythic thinking that you can cope with informa- 
tion overload. Pattern recognition is another name 
for mythic thinking. Instead of just acquiring data, 
you have to discover patterns in order to survive. 

There is a well-known story by Edgar Allen Poe. 
It is called "THE MAELSTROM"— about a sailor 
who goes fishing one afternoon and becomes so ab- 
sorbed in his thought that he forgets to notice the 
turn of the tide and suddenly is caught in a great 
whirlpool. He realizes he can't row his boat out of 
the maelstrom and so he begins to study the action 
of the maelstrom. He observes that certain kinds of 
materials are sucked down into it and never return 
while other kinds pop up again. He attaches him- 
self to one of these recurring objects and survives. 
This is pattern recognition. My point is: to under- 
stand the process is an indispensable way of coping 
with information overload. 

But there are some other points I want to intro- 
duce, apropos of the creation of huge new environ- 



256-707 0-67— 2 



11 



ments by technologies. One of the peculiarities we 
discovered lately when we began working on this 
problem of pattern recognition, is that whenever a 
new environment forms, it is invisible and what you 
perceive is the old environment. 

I think it was Bertrand Russell who asked, if bath 
water were to get hotter one degree per half hour, 
would we ever be able to scream. Would we ever 
know to scream before we were completely boiled? 
The answer is no, we wouldn't, and it is apparently 
quite possible to boil fish alive by simply raising the 
temperature slowly almost imperceptibly. 

Each of us forms a body percept, from moment 
to moment, based upon his intake of sensations, per- 
ceptions, but we are completely unaware of this 
body percept which we form of ourselves from mo- 
ment to moment. It takes considerable dexterity and 
skill to observe one's own body percept, the image 
we form of ourselves. The immediate surrounding — 
the new environment, whatever it is — is always in- 
visible to the whole population. 

Navigating with the Rear- View Mirror 

What they see in the mirror is the old environ- 
ment. When the railways were new on this continent 
a century ago, the people of that time formed an 
image of their new industrial iron horse environment 
that was the Jeffersonian ideal of agrarian pastoral 
life. 

Modern suburban man lives in the rear view mir- 
ror of "Bonanza." He perceives not suburbia but 
"Bonanza life." That is the old environment, the 
preceding environment, a world of compassion, ini- 
tiative, and resourcefulness, a comfortable form of 
the frontier. Very picturesque! 

The habit of always using the rear view mirror for 
navigation is now yielding because at jet speeds 
the rear view mirror has proved to be a somewhat 
unreliable device. But, also at very high speeds, it 
becomes possible to recognize environments that 
were previously not noticeable. 

The Effects of the Electric Technology 

And so the advantages of high speed change is in 
the recognition of forms that previously had been 
imperceptible. If education is undergoing the flip 
from instruction to discovery or tending that way, 
there are other extraordinary flips resulting from 
technological advance. There is a general tendency 
to use the audience as a work force instead of as a 
target or consumer. One of the strange results of the 



speed-up in information processing and speed-up of 
access to information is that the total audience can 
become involved in decision-making. 

The idea of having an audience as work force, in 
politics and in business, is perhaps foreshadowed in 
the advertising world, where for some time now a 
new environment has been forming. 

As information processes improve, the advertising 
world is steadily substituting itself for the products; 
that is, people now derive their satisfactions not 
from the product but from the advertisement. 

You see, the research of the advertisers has long 
revealed to them that the people who read ads are 
people who own the things, not the people who 
should or might buy them. People read ads as a 
source of satisfaction, consumer satisfaction. In an 
electric information environment, the ad is steadily 
replacing the product. And this isn't really paradoxi- 
cal. It is what we have been working to achieve for 
a long time. 

The programming of the human environment by 
information, the total programming of the human 
environment by information, is more and more with- 
in reach with satellite broadcasting. You can now 
program the world environment as a single shared 
experience. As information levels rise and improve, 
we share the experience of this planet as a single 
thing with everybody. 

These are huge flip-overs or reversals that natu- 
rally tend to be hidden simply because they are of 
such vast environmental form, and you may wish to 
discuss them. 

One of the flips that exists now in the age of the 
computer is that it becomes possible to enter a 
cashless society. By use of the credit card, it is pos- 
sible to effect all type of transactions without any 
form of cash whatever. And when it becomes possi- 
ble to do something, there is usually a kind of rest- 
less itch until something is done about it. 

I am going to mention one further flip-over that is 
taking place in our own homes, under our own 
noses, and with great disturbance in our lives, but 
without any recognition of the pattern. 

With the coming of the circuit, man folds back 
into himself. With the coming of television, man be- 
comes, instead of camera going out into the world, 
man becomes screen. 

Our children for the last ten years have had the 
extraordinary experience of growing inside them- 
selves with television. They are on the receiving end 
of that electric charge. It carries them inside them- 
selves through the looking glass into a world, 



12 



through the vanishing point into a kind of inner 
meditative world. 

The effect of television has been to orientalize the 
Western world. This is so vast a program or repro- 
gramming of the sensory life as to be completely 
unobserved. But, while we are busy westernizing the 
East, we are hastily easternizing the West. 

Our children regard parents who belong to the 
old Western civilization as finks, as squares, simply 
because they are put together on a different pattern 
from the pattern that children take for granted, of 
inner depth and commitment. 

A young friend from Harvard was saying the other 
day, "We are not a goal-oriented generation." He is 
a young architect. He said, "Sure, we'll learn medi- 
cine, we'll learn architecture, but we wouldn't dream 
of setting ourselves a goal in life and moving steadi- 
ly toward it." 

He said, "What we want is to know what is going 
on in the total human environment. We're not a 
goal-oriented generation." 

The hunter isn't a man with a goal. He plays the 
total field, and I think electronically we are com- 
pelled to develop our perception and our awareness 
this way if we are going to exert any sort of control 
over the next changes in the world. 

The Hot and the Cool 

We might ask ourselves to what extent would it 
be possible to have trade without information cover- 
age, and also to what extent would it be possible to 
have war without information? 

If there were no coverage of any sort of any war, 
no reports, no information, how would this change 
the nature of war? To what extent is war accelerated 
and raised into a potent force just by good cover- 
age? To what extent is information coverage, itself, 
aggressive warfare? 

In a world in which the whole environment is 
made of information, it is natural that war should be 
conducted by the same means and that top weap- 
onry is increasingly that of the image. We call it 
the "cool" war, and that means totally involving. 

I have a friend in New York, Tony Schwartz, the 
famous tape recording man. He said: "You know, 
when I came to this part of town, years ago, the 
police told me: Tony, if you are ever in trouble, 
never shout HELP. Shout FIRE! They said, if you 
shout help, you'll get nothing. But if you shout fire, 
every window will go up." 

Now this is the mystery of the "hot and the cool." 
People don't want to get involved in "help" situa- 



tions; it is too "cool." Fire is a more reassuring and 
less involving medium. 

There is also one very relevant thing to point out 
about the computer, which has had its share of at- 
tention already. Notice that in line with the school 
of the rear view mirror, the computer is being set to 
do all the old jobs, not the new ones. It is like the 
buggy whip holders in the first motor car. Com- 
puters are being given the job of card filing and re- 
trieval. But, the computer, by speeding up the total 
available human experience, has in effect put outside 
— as the new environment — the human subcon- 
scious or unconscious. 

For years I've been noticing the extension of con- 
sciousness by various technological means. The 
human unconscious is the total experience of man- 
kind, stored without any story line, just jumbled 
and assembled in the human unconscious. Now, 
with instant dispersal and instant retrieval sys- 
tems, we have the all at once. We have put outside 
us, as a new environment, the unconscious which is 
part of that return to the age of the hunter, the most 
primitive form of human society. 

The Environment as the Product of 
Consciousness 

The unconscious, just because it is an all at once 
world of everything that ever was, now becomes en- 
vironmental. We can now have outside ourselves 
everything that men ever were, or knew, or experi- 
enced — simultaneously. This perhaps does relate to 
the satellite environment of our planet, turning the 
planet into an old nose cone; an old hunk of camp, 
an old art form. 

The availability of the unconscious also insures 
the future in terms of investment. I'm pretty safe, I 
think, in saying that the future of investment on this 
planet is going to be overwhelmingly the restoration 
of the planet through all the phases of its develop- 
ment. The countless billions of dollars that will be 
spent in the next decades refurbishing this planet — 
just like doing a Williamsburg job on the old planet 
— will be an overwhelming theme and area, recon- 
structing the total planetary process as it has come 
down to us through countless ages. This is the most 
elaborate form of data processing that is conceiva- 
ble. 

The extension of the unconscious compels man in 
the electronic age to live, mythically, as a way of 
pattern recognition, and a way of coping with this 
vast amount of knowledge. If you look around at 
the changes in the world of the arts — not to mention 



13 



science, which is a prolific source of new myths, new 
mythic form and understanding of nature — you en- 
counter this strange reversal. Way back in the age of 
the hunter, paleolithic man was firmly convinced 
that he made his environment. He did it by rituals, 
dances, and various cosmic communing, and behav- 
ioral patterns. Primitive men always thought they 
made the world; they wound it up and renewed its 
energies by their rituals. 

Instead of just sitting, instead of just being an 
occupant of the world, we make it. Prior to the 
Greeks, men thought they made the world; then 



came a few centuries of sitting and living in the 
world, man contained in his world. 

Then with the age of the circuit, a return to the 
age of the hunter, man makes his world once more, 
makes his environment, is no longer just an inciden- 
tal content item. 

Are we not moving very much back into that 
state? 

Is not this conference really dedicated to the 
theme that man makes his environment, makes his 
world? Under electronic conditions, we return to 
that strange state of the most primitive society — 
making our cosmos! 



14 



or output of these various inputs. We assume we are 
getting our money's worth, but we can't measure the 
value well. 



Dr. Seitz: Our next speaker is Dr. Richard Cooper, 
Professor of Economics at Yale University. 



Professor Cooper: When our hosts asked me to 
speak, they suggested that I summarize the light 
which the academic subject of economics might shed 
on the relationship between technology and interna- 
tional trade, and to quantify if I could the influence 
of technology on foreign trade and investment. I du- 
tifully read all that I could find by professional 
economists on this subject, much of it not yet pub- 
lished. On the basis of the material I could find, 
I must give the profession low marks. 

Economic theory has largely skirted the issue, 
both on the side of technology and on the side of 
trade. The contribution of technology to economic 
growth has, up to now, been derived simply as a 
residual, after allowing for other things which we 
know about. 

The difficulty in quantifying the effect of technol- 
ogy on trade is, however, I think intrinsic, as I will 
try to indicate. 

Quantifying the Effect of Technology on 
Economic Growth 

Robert Solow, ten years ago, estimated that tech- 
nical change accounted for about two-thirds of the 
growth of the U.S. economy, after allowing for 
growth in the labor force and in the capital stock. 

Edward Denison in 1962 whittled the con- 
tribution of what he called "increased knowledge and 
its application" down to twenty per cent, after allow- 
ing for more efficient use of existing resources and 
better education of the labor force as well as growth 
of the labor force and the capital stock. 

Lately a more positive approach has been taken 
to measurement of the contribution of technology, 
but we still must rely excessively on such imperfect 
indicators as expenditures for research and develop- 
ment, the number of scientists and engineers en- 
gaged in research and development, patents applied 
for, patents granted, and so on. We still do not 
know how to measure satisfactorily the productivity, 



Trade Theory and Reality 

The situation is not much more satisfactory on 
the side of trade. Most theoretical discussions of in- 
ternational trade involve what may be called tradi- 
tional trade, the exchange of food for raw materials 
or for simple manufactures. David Ricardo, the 
English inventor of our theory of comparative ad- 
vantage to explain trade flows, drew his example in 
terms of wine and cloth. 

The United States imports coffee and exports 
wheat, both as a result of climatic and soil 
differences. Europe is often characterized as an im- 
porter of food, fuels and other raw materials, and an 
exporter of manufactures. 

The composition and direction of trade depends, 
in the theory, largely on natural endowment, al- 
though occasionally special skills are also involved. 

It is difficult to reconcile this theoretical picture 
of trade patterns to the patterns which have actually 
developed. 

Manufactured products now account for nearly 
sixty per cent of the value of world trade, up from 
twenty-five per cent in the 1920's, and the propor- 
tion is still growing. Trade among major industrial 
countries now accounts for nearly half of world 
trade and the share of this trade which is manufac- 
tures has grown even more rapidly than is true for 
the world as a whole. 

The growth in trade of manufactures does not 
reflect a need to pay more in manufactures for the 
food and raw materials needed by the industrial 
countries. It represents increasingly an exchange of 
manufactures for manufactures. The growth of this 
type of trade is due to a variety of factors, including 
the reduction in trade barriers over the last fifteen 
years, and the rising importance of brand name 
products in consumer purchases. But a key factor 
may also have been the rapid pace of technological 
innovation which has taken place. An innovation 
adds to the list of export products, at least temporar- 
ily, and trade is stimulated. 

Quantifying the Effect of Technology 
on Trade 

We have little quantitative information on the 
influence of technical change on trade. Nearly ten 
years ago, the Danish economist, Erik Hoffmeyer, 
studied the pattern of U.S. trade and found that the 



15 







RICHARD N. COOPER is Professor of Economics at Yale University. Earlier, he 
served for two years as Senior Staff Economist for the Council of Economic Ad- 
visers, followed by two years as Assistant Professor of Economics at Yale. He then 
returned to the U.S. Government on leave from Yale to become Deputy Assistant 
Secretary of State for International Monetary Affairs prior to assuming his present 
position. 

A graduate of Oberlin College with his B.A. in 1956, Professor Cooper acquired 
his degree of Master of Science in Economics in 1958 at the London School for 
Economics and four years later his Doctorate from Harvard University. 

Dr. Cooper's publications have treated the international aspects of technical 
change and long term trends in trade and economic growth, as well as international 
financial issues. He has addressed himself extensively to the competitive position of 
the United States and to problems of national economic policy in an integrated 
world economy. 



United States tended to specialize in what he called 
research-intensive goods. He found that U.S. exports 
of these research-intensive goods increased twenty 
times between the period just before World War I 
and the mid-fifties, while exports of traditional 
goods merely trebled. 

More recently, several studies have shown that 
there is a striking relationship between U.S. export 
performance and several measurements we might 
think are related to technical change. 

Donald Keesing has found, for example, a very 
high correlation, industry by industry, between re- 
search and development expenditures in relation to 
sales and the U.S. share of exports of manufactures 
by all the OECD countries. The relationship between 
U.S. export performance and share of industry em- 
ployment occupied by scientists and engineers is 
similarly high. The weight of the evidence leaves little 
question that there is some relationship, at least for 
the United States, between export performance and 
industrial research and development. 

This relationship deserves closer scrutiny. First, it 
should not blind us to the impact of technical 
change on more traditional forms of trade and, 
second, we should not take for granted the direction 
of causality in the relationship just noted. 

As to the first point, the impact of technology is 
clearly not limited to the generation of new products 
which enter international trade. Our attention is 
usually focused on these — the visible products, the 
jet aircraft, the new computer, synthetic fibers, the 
new drugs. But the influence of technology is far 
more pervasive than that. 

In addition to these product innovations, there 
are also important process innovations, improve- 
ments which lower the cost of producing and mov- 
ing a wide variety of goods, including goods of the 
traditional type. Examples of such cost-reducing im- 
provements come to mind in concentrating metal 
ores, producing steel, weaving cloth, harvesting grain, 
raising chickens. 

Some innovations have a double role. They in- 
volve the new product and they lower costs in pro- 
ducing traditional products. The sewing machine and 
the mechanical reaper are now classic examples; 
the machinery industry is replete with current exam- 
ples. 

Sometimes the so-called traditional products are 
themselves improved through advances in technical 
knowledge. Selective breeding has increased both 
the yield and the quality of many agricultural prod- 
ucts and has produced chickens and turkeys which 



far surpass their scrawny ancestors in edibility. 
Purity of refined metals has been increased. New 
alloys have greatly increased the performance of 
these metals, and so on through most products. 

Furthermore, trade has been greatly encouraged 
by the impact of technological change on the trans- 
portation industry. The big change came in the 19th 
century with the railroad and the steamship, but 
these changes have not ceased. Ocean freight rates 
continue to decline relative to the value of goods 
shipped and large bulk carriers with specialized port 
facilities will make profitable the movement of large 
amounts of low value goods, many being the tradi- 
tional products. 

Air transport will come into range of an increas- 
ing number of goods as air cargo methods improve. 
International air freight rates have fallen twenty per 
cent in the last decade while other prices were gen- 
erally rising, and the trend will probably continue 
downward. 

It is worth recalling, however, that not all tech- 
nological advances stimulate trade. Some of the ma- 
jor developments have the opposite effect, as when 
nylon largely replaced silk, or when the Haber 
process permitted fixation of nitrogen from the air 
and reduced dependence on natural deposits. 

Such developments reduce dependence on geog- 
raphy and substitute, as it were, technology for ge- 
ography and climate, tending to lower imports. 

For all these reasons, it is not possible to identify 
the impact of technology on trade by focusing on a 
short list of technologically visible goods. The im- 
pact is much more general, operating on production 
costs and- transport costs as well as producing new 
products; and some improvements may inhibit rather 
than stimulate trade. 

In view of this it may be asked, however, why 
on such measures as we have there is in fact such 
a close relationship, at least for the United States, 
between exports of certain goods and technological 
inputs into those industries. This close relationship 
has already been noted. I would suggest, however, 
that it requires an interpretation somewhat different 
from the one usually cited or implied. This latter 
interpretation treats R and D expenditures as largely 
autonomous, determined primarily, say, by govern- 
ment concern for national defense. But much R and 
D is itself responsive to commercial demands for 
new products as incomes grow and for new labor- 
saving techniques of production as wages increase 
and labor becomes more expensive. Technical im- 
provements tend to respond to the demands pri- 



17 



marily of the domestic market. Many of the resulting 
improvements also stimulate exports, either by cre- 
ating new products or by lowering the cost of existing 
ones. 

There is some evidence, at least within the elec- 
tronics industry — I assume the same is true for 
other industries — that those firms whose research 
and development programs are geared toward com- 
mercial application, rather than government con- 
tract work, do much better, both in the home mar- 
ket and in foreign markets, than is true of firms 
whose research effort is oriented heavily toward spe- 
cial requirements of government contracts. These 
often involve very exacting requirements which dom- 
nate cost considerations. For commercial applica- 
tions, cost considerations are important. 

A Few Countries Are the Primary Technical 
Innovators 

Domestic demand attracts private research, and 
research success satisfies new market demands, both 
at home and abroad. It is not surprising in view of 
the relationship between the domestic market and 
directed research, that the great majority of the in- 
novations take place in half-a-dozen to a dozen 
countries, and that among these the United States 
plays a leading role. 

Quite apart from the effect of size — the propor- 
tion of Nobel Laureates in the last 15 years who have 
been American corresponds roughly to the U.S. share 
in free world industrial production, for instance — 
there are two reasons for supposing that the United 
States might generate a disproportionate share of 
commercial innovations. The U.S. economy is on the 
frontier of experience, as it were, in two respects: 
first, per capita incomes are higher in the U.S. than 
elsewhere and have continued so for a number of 
years; second, closely related to that, wage rates 
are substantially higher than elsewhere and are con- 
tinuing to rise, so that American businessmen face 
before others the need to find new labor-saving tech- 
niques of production. 

The first of these effects can be seen in a wide 
range of consumer products which were first pro- 
duced on a massive scale in the United States — au- 
tomobiles, household appliances, telephones, hi-fi 
sets, small boats, small aircraft. The potential de- 
mand for such products not only generates improve- 
ments in the products themselves, but also induces 
improvements in productive techniques to service 
the volume of demand and to bring the product 
within the reach of the mass consumer a bit sooner. 



High Labor Cost as a Stimulus to Innovation 

The second effect can be seen in the long history of 
U.S. innovations directed at the conservation of 
labor, which has always been high cost relative to 
other productive factors and which on some occa- 
sions has simply not been available in the quantity 
or quality required to satisfy domestic demand with 
old techniques of production. 

The sewing machine, the linotype machine, the 
typewriter, shoe machinery, and down to data sorting 
machinery and the computer are only the best known 
of these labor-saving innovations. 

Labor-saving innovations were often U.S. inven- 
tions. The need drew creative attention to possible 
solutions. Very often the inventions were made 
elsewhere but first widely used in the United States, 
where there was a wide receptivity to improvements 
in techniques. 

A typical illustration of the importance of receptiv- 
ity as distinguished from just the generation of new 
products is offered by the sewing machine, which in 
a primitive but effective form was invented by a 
Frenchmen, Thimonnier, sixteen years before Elias 
Howe constructed his machine in the United States. 
It was actually used to mass produce uniforms for 
the French Army (an earlier example of government 
support for innovation), but the Parisian tailors 
formed mobs, smashed the machines, and forced 
Thimonnier to flee to Paris. The labor-short U.S. 
economy could not afford the luxury of foregoing 
an important labor-saving device. 

Resistance to technological improvement is not 
absent today on either side of the Atlantic, but pre- 
sumably it is not carried to the lengths of the Parisian 
tailors. So long as labor costs are highest in the 
United States, however, and are expected to rise 
further, the incentive to devise new labor saving 
techniques will be strongest there. As wages rise in 
Europe and elsewhere around the world, business- 
men there will be passing through a range of ex- 
perience already passed in the United States, and 
the possibility of borrowing labor-saving techniques 
rather than having to generate them will be much 
greater. 

On both counts, high per capita incomes and 
high and growing wage rates, innovation is there- 
fore likely to be somewhat stronger in the United 
States until incomes elsewhere and labor costs rise 
to the U.S. level, a day that, at least for Europe, is 
still some distance off, but is at least within sight. 

The choice of technology available to less devel- 
oped countries will be even wider and it is at present 



18 



_ 



a matter of considerable debate whether they should 
in general adopt techniques now obsolete in the ma- 
jor industrial nations but which are appropriate to 
the availability and cost of labor in those countries, 
or whether they should adopt the latest, most up-to- 
date techniques even though they are labor labor- 
saving. 

The Stream of Innovations 

Technological innovation can undoubtedly 
strengthen the competitive position of a country in 
which the innovation takes place, whether it be one 
which enlarges exports or displaces imports. How- 
ever, technological advantage in any one product is 
transitory. Once a break-through has been made, the 
new information is typically spread widely. Underly- 
ing cost considerations will ultimately govern where 
it will be produced and where it will be used. 

For the impact on trade, we must look not to the 
individual product (because of obsolescence it may 
not even be marketable long enough for basic cost 
considerations to come into play) but to the stream 
of new products and processes, each one often re- 
placing previous ones. 

The advantage which accrues to a country's trad- 
ing position depends both on the intensity of the 
stream of innovations and on the rate at which new 
knowledge is put into use elsewhere, where the basic 
cost advantages lie. 

Intensity of the stream is partly accidental, the 
product of individual and uncoordinated inventive 
effort, but it is increasingly the product of systematic 
and coordinated application of talent and resources 
to discovery. 

What we may call the research and development 
industry, programmed expenditures for the develop- 
ment of new techniques and new products, absorbed 
in the United States only two-tenths of one percent 
of GNP in the early 1920's, but has grown to 2.8 
percent of GNP in 1960 and must be three percent 
today. Even excluding government financed research 
and development, the expenditure grew sharply from 
the '20's to over 1 percent of GNP for commercially 
financed R&D today. 

Business incentive to develop new products is 
strong as the public with steadily increasing incomes 
gets sated with the traditional necessities of fife. 
Other countries have experienced a similarly rapid 
growth of programmed R&D expenditures over the 
same period. 



Is Spill-Over a Significant Source of 
Innovation? 

Not all of these expenditures contribute to the 
stream of commercially relevant innovations. Much 
R&D expenditure, especially in France, Britain, and 
the United States, is financed by the central govern- 
ment in pursuit of national defense. There is a lively 
debate about how important is the so-called spill- 
over from this military research. There are a few 
examples where military R&D has had clear com- 
mercial application, such as the jet engine. In other 
cases, military R&D has pioneered a field and led 
to further development work aimed at the civilian 
market. This was to some extent true of computers 
which started on government contract. 

But students of these spill-overs in the United 
States find them to be surprisingly small. They are 
difficult to quantify but it is noteworthy that in the 
mid-fifties only four percent of all patent applica- 
tions arose from defense contracts, even though the 
Defense Department financed roughly half of the to- 
tal U.S. R&D. Furthermore, commercial utilization 
of private patents arising from government-financed 
R & D is only thirteen percent, compared with 
around sixty percent for patents arising from private 
development work. One aerospace firm reported that 
out of four hundred patent applications accumulated 
by the end of the 1950's, only three had commercial 
application. 

Indeed, there is some concern in this country that 
very large government R&D programs may actual- 
ly reduce the stream of commercial innovations by 
drawing away critical scientific and engineering tal- 
ent into military and now space work to a greater 
extent than the pool of such skills is augmented by 
the attractions of these programs. Fewer men are 
available for commercial research and development. 

Finally, even when there are spill-overs, much 
commercial R & D is often required to adapt them 
to the commercial requirements. It has often been 
firms other than those doing the military work which 
have made the products commercially successful. As 
noted above, export success, at least within some 
industries, seems much more closely related to pri- 
vately financed research and development expendi- 
tures than to total research and development ex- 
penditures. 

International Diffusion of Technology 

The intensity of the stream of innovation is only 
one factor governing the trade advantage a country 
gains from technological change. The second impor- 



19 



tant factor is the rate at which new knowledge is 
diffused abroad. Unless the innovating country enjoys 
a basic cost advantage in producing the new product, 
its trade position is enhanced only to the extent that 
there is a lag in time between its production of the 
product and new production in other, lower cost 
locations. 

While the evidence we have is only fragmentary, 
it does not seem as though the international diffusion 
of new techniques of production or of new products 
is much more rapid today than it has ever been in 
the past. 

The point is illustrated by the quip of a few years 
ago which went, "In January, an American invents a 
new product; in February, Tass announces that a 
Russian had invented this product thirty years ago; 
and by March, Japan is exporting the product to the 
United States." 

In times past, great efforts were taken to prevent 
the diffusion of technological knowledge to preserve 
monopoly for those with the specialized knowledge. 
The secret of Tyrian purple was so tightly kept by 
the Phoenicians that it was lost in the course of 
time. England, seat of the industrial revolution, was 
much aware of the advantage it gained by the new 
machinery and took stringent measures in the 18th 
and early 19th Century to prevent the export of ma- 
chinery, especially of textile machinery. The export 
prohibitions on capital goods were not finally re- 
moved until 1843. 

France had similar restrictions. Many Germans 
were worried about the export of capital goods right 
up to the eve of World War I out of fear that it 
would undercut their markets. 

Knowledge can be transmitted through emigration 
as well as through the export of capital goods. The 
first spinning mill in the United States was set up by 
an Englishman, William Slater, in 1790, who had to 
memorize the machine design before he emigrated. 
Britain was very much aware of this possibility 
and imposed heavy fines on skilled English workmen 
who went abroad. Those who were abroad for more 
than six months, despite notification from the British 
Embassy to return, lost their British citizenship and 
all their property was confiscated. 

This kind of impediment to the movement of 
knowledge was largely swept away by the free trade 
sentiment of the 19th Century, and today such re- 
strictions are generally limited to goods of military 
application. Even without such deliberate imped- 
iments to diffusion of technical improvements, diffu- 
sion has been slow, but it has been accelerating. The 



evidence we have is largely anecdotal, but as an 
illustration consider the typewriter, which was in- 
vented in the United States in 1868 and by the mid- 
eighties had quite a large market in this country. It 
first appears as a separate entry in U.S. export 
statistics in 1897 with exports amounting to $1.4 
million. A report of 1908, eleven years later, indi- 
cates that American typewriting machines had only 
German competitors in Europe. Actually by that 
time there were also two British firms with exports 
of $90,000, a negligible amount compared with U.S. 
exports of %6 l /i million. Broadly speaking, it took 
twenty years from the time of heavy marketing in 
the U.S. to the time of modest exports by the few 
leading competitors, Britain and Germany. 

Compare this with more recent developments. 
Within a year of the introduction of stainless steel 
razor blades by Wilkinson Sword, a British firm, 
several American firms had competing blades on the 
market. This was a defensive response and it was 
rapid. The inauguration of new techniques has only 
been slightly less spectacular in other areas. Float 
glass was produced in the United States only four 
years after the pioneering production began in 
England. Many computers have been produced in 
Europe within a relatively few years after they were 
first marketed in the United States. 

Even where international trade is not directly in- 
volved, new technology moves quickly. For instance, 
U.S. firms introduced much more efficient methods 
for generating electricity from coal in 1949. By 
1956, seven years later, all new French generating 
capacity incorporated the new technology and a sub- 
stantial part of new British capacity did. 

We have other indications of the rapid diffusion 
of technical knowledge. One is the so-called interna- 
tional patent crisis, where the number of cross-filings 
has increased to such an extent that most national 
patent offices are in heavy arrears in their work. A 
second is the great expansion of patent licensing 
across national frontiers. The United States alone 
earned more than $ 1 billion from foreigners last year 
in royalties, license fees, and management fees — ex- 
ports of knowledge, disembodied from exports of 
goods and even, in many cases, from exports of cap- 
ital. 

Finally, there has been a large and growing 
amount of direct foreign investment abroad — the 
creation of the multi-national firm. Such investment 
tends to diffuse technical knowledge and manage- 
ment skills as well as, or even perhaps more than, 
capital. 



20 



Leads or Lags? 

I will close by venturing some speculation on 
these trends. In the first place, they offer some par- 
tial explanation for the baffling conjunction of two 
arguments, one on the eastern side of the Atlantic, 
that the so-called technological lead of the United 
States is increasing, and the other on this side of the 
Atlantic, and with some vigor only a few years ago, 
that the U.S. competitive position in world markets 
is being weakened because of a diminution in tech- 
nological lead. In fact, both arguments probably 
represent unwarranted generalizations from particu- 
lar examples and, of course, both tendencies can be 
observed simultaneously by looking at different in- 
dustries. 

A more sophisticated reconciliation would refer to 
the two basic dimensions that I have just been dis- 
cussing. The intensity of the stream of innovations 
from the United States may have increased — we still 
await evidence on whether that is actually so — but 
at the same time, the rate of diffusion of this knowl- 
edge to other countries has also increased. From the 
viewpoint of competitiveness in international trade, 
it is the product of these two factors which is im- 
portant, neither one alone. 

Speculating on the Future Basis of Trade 

The very rapid diffusion of new technological 
knowledge along with the great accumulation of 



capital which is taking place in most countries sug- 
gests a deeper irony. It is that most large countries 
will become more alike over the course of time in 
their structure of production and levels of income, 
and they can become economically more self-suffi- 
cient. The basis for trade among them will be under- 
cut. There is already some evidence that most West- 
ern countries do look more alike in the structure of 
their production, particularly in manufacturing pro- 
duction, than they did in the past. 

Trade has certainly not diminished among these 
countries, even relative to output, but even while 
technological change throws up new products for 
trade, rapid diffusion of this knowledge reduces the 
underlying basis for trade. 

One can even speculate — idly, for most of us — 
that in the course of time there will be a swingback 
in relative importance to the traditional trade with 
which we started out — trade in food and raw ma- 
terials, whose production costs are rooted in climate 
and natural endowments — while advances in tech- 
nology and rapid dissemination of new knowledge 
permit many countries or small groups of countries 
to produce their own requirements of the other com- 
modities or services. 

Perhaps this is one of those historical reversals to 
which Professor McLuhan has referred, like the 
complete cycle from a tailor-made service economy 
through mass production and back again. 



21 



Dr. Seitz: Thank you very much, Professor Cooper. 
Now, we will begin the discussion period and I would 
first like to call on two formal discussants. The first 
is Dr. Hendrik Casimir, Director of the Research 
Laboratories of the Philips Industries of Holland. 



Dr. Casimir: I am not certain that the remarks I am 
going to make relate directly to what the two 
speakers have said, but I should like to make a few 
comments on the role of basic science in technology. 

Fundamental science is and should be an aim in 
itself. It is one of the most noble endeavors of man- 
kind to discover curious facts, to relate the appar- 
ently unrelated, to build abstract edifices of theory, 
to probe the universe as astronomers do, and to 
probe the smallest particles as the high-energy phys- 
icists do. 

It creates a beauty, an understanding and har- 
mony. One doesn't perhaps go so far as Heinrich 
Hertz, who, when working on his thesis, said to his 
mother: "Poor mother. What a pity that this type of 
beauty will forever remain a closed book to you." 
Had I said this to my mother while working on my 
thesis, she would have said, "Oh, yes, you are a 
dear little boy, but don't talk such ridiculous non- 
sense." But then she was a very wise woman. It 
happens, however, that this basic science provides 
increasingly the tools without which entrepreneurs 
and inventors and innovators would be completely 
helpless and without effect. 

The Debt of Technology to Basic Science 

I have heard statements that the role of academic 
research in innovation is slight. It is about the most 
blatant piece of nonsense it has been my fortune to 
stumble upon. 

Certainly, one might speculate idly whether tran- 
sistors might have been discovered by people who 
had not been trained in and had not contributed to 
wave mechanics or the theory of electrons in solids. 
It so happened that inventors of transistors were 
versed in and contributed to the quantum theory of 
solids. 



One might ask whether basic circuits in com- 
puters might have been found by people who want- 
ed to build computers. As it happens, they were dis- 
covered in the thirties by physicists dealing with the 
counting of nuclear particles because they were in- 
terested in nuclear physics. 

One might ask whether there would be nuclear 
power because people wanted new power sources or 
whether the urge to have new power would have led 
to the discovery of the nucleus. Perhaps — only it 
didn't happen that way, and there were the Curies 
and Rutherford and Fermi and a few others. 

One might ask whether an electronic industry 
might exist without the previous discovery of elec- 
trons by people like Thomson and H. A. Lorentz. 
Again, it didn't happen. 

One might ask even whether induction coils in 
motor cars might have been made by enterprises 
which wanted to make motor transport and whether 
then they would have stumbled on the laws of in- 
duction. But the laws of induction had been found 
by Faraday many decades before that. 

Or whether, in an urge to provide better com- 
munication, one might have found electromagnetic 
waves. They weren't found that way. They were 
found by Hertz who emphasized the beauty of phys- 
ics and who based his work on the theoretical con- 
sideration of Maxwell. I think there is hardly any 
example of twentieth century innovation which is 
not indebted in this way to basic scientific thought. 

Basic Science Awaits Use by the Entrepreneur 

I am quite certain that sooner or later the work 
that is now going on in high-energy physics, on 
problems like parity conservation and the eight-fold 
way and the theory of unitary groups and so on, 
will in some way or other lead people of enterprising 
mentality and of inventive skill to come forward 
with entirely new branches of technology. 

These basic aspects of science are common prop- 
erty. They are available to the whole world, for 
everyone who wants to study them, and by the time 
they are being used they are usually condensed in 
excellent textbooks and manuals. You don't have to 
repeat these studies to be able to reap the harvest, 
but one must have certain powers of absorption. 
One may ask whether these can be obtained, can be 
present to a sufficient degree without some involve- 
ment in the scientific field. 



22 





HENDRIK BRUGT GERHARD CASIMIR is Director of Research Laboratories 
for the N. V. Philips Industries of Holland. Concurrently, he serves as a member 
of the Advisory Council for Science Policy of the Dutch Ministry of Education and 
Sciences, The Hague. He is currently in the United States as a member of the 
Team of Examiners of U.S. Science Policy for the Organization for Economic 
Cooperation and Development. 

He has been with the Phillips organization since 1942, assuming his present 
position in 1946 after four years of research in physics. Preceding this, he was for 
ten years Professor of Natural Science at the University of Ley den. 

Dr. Casimir, a native of The Hague (1909), studied theoretical physics at Ley- 
den with Ehrenfest, at Copenhagen with Niels Bohr, and at Zurich with Pauli. He 
was awarded his Doctoral Degrees in Mathematics and Natural Sciences by the 
Universities of Ley den and Copenhagen. Dr. Casimir is the author of numerous 
publications in the fields of theoretical physics, applied mathematics and low tem- 
perature physics. 



The Tie Between Scientific Competence and 
Economic Development 



The case of Japan was mentioned. It is true they 
went into transistors without very large investments 
in solid state research, but in my view their pro- 
ficiency in absorbing knowledge is not entirely un- 
related to the fact that Japan, after all, produced two 
Nobel Prize winners in physics and a number of 
other leaders in research. 

It has something to do with the fact that Japan 
before the World War pioneered in certain magnet- 
ic materials. It has to do with the fact that on the 
roofs of our houses we find television antennas of 
the Yagi type, invented by Professor Yagi in Japan. 
He was a man who encouraged Yukawa not to 
study atoms but nuclei, and so Yukawa was led into 
the study of nuclear forces. This indirect route made 
him not only the winner of a Nobel Prize, but also 
the originator and father of high energy physics. 
And it has something to do with the fact that, at 
present, in the Japanese school of theoretical solid 
state physics, a man like Kubo is dominating parts 
of the field. Is this mysticism? You will have a hard 
time to convince me that this is a myth that. should 
be broken. I might conclude with one or two ex- 
amples from my own country which show that 
proficiency in certain research may not lead to tech- 



nological and commercial results, without the sup- 
port of sufficient enterprise, but that in another way 
it still has certain influence in the whole picture. 

Let's take three cases of Dutch Nobel Prize win- 
ners: Kamerling Onnes, who liquefied helium and 
discovered superconductivity. It did not lead to an 
immediate development of cryogenic industries in 
the Netherlands. It didn't give us — even though the 
primary logical circuits were also made in Holland 
in the thirties — it did not give us a great advance 
toward launching a cryogenic computer. Technology 
and industry weren't right for that. Yet when in 
Holland one decided to tackle certain aspects of 
cryogenic engineering, the existence of this tradition 
helped us quite considerably. 

The fact that electrocardiography was discovered 
in the Netherlands did not lead at once to a great 
business in electromedical equipment. Yet the fact 
that there was a general level of medical research 
contributed to the fact that Holland now exports a 
lot of x-ray equipment to other countries. 

The invention of the phase contrast electron-mi- 
croscope by Zernike did not lead to a great manu- 
facturing enterprise for such microscopes. Still, it is 
in my opinion related to the existence of a pros- 
perous optical industry in the Netherlands. 

These are the few remarks I wanted to make and 
which perhaps can be contributions to the discussions 
of today and tomorrow. 



24 



Dr. Seitz: Our next formal discussant is Dr. John E. 
Reynolds, who is advisor to the Division of Inter- 
national Finance for the Board of Governors of the 
Federal Reserve System in Washington, D. C. 



Dr. Reynolds: I think it is important that we give 
the audience a chance; therefore, I will try to be 
very brief indeed. Perhaps the most useful thing I 
can do is to note the one or two of the points at 
which it seems to me the different remarks we have 
heard this morning bear upon each other. 

Seeing Things as a Whole 

One of Professor McLuhan's themes is that the 
new technology, the electronic or the information 
technology, enables us to see things whole; indeed, it 
compels us to see things whole. We have to take 
refuge from information overload in something he 
calls pattern recognition. 

I think throughout all the major speeches of this 
morning has run the thread of "having to see things 
whole" in analyzing the role of technology in world 
trade. I see this in at least three different aspects. 

Learning to Use Technology 

First, that we have to have a sense of history; that 
we have to see a time continuum, and recognize that 
the past is linked with the present and that with the 
future. Both Secretary Connor and Dr. Seitz remind- 
ed us that man has had technology as long as we 
have any record of his existence. Technology and 
trade have been the essence, really, of our whole 
rise from the cave up to our present state of life. 

And while, as Professor Cooper says, economists 
will differ on whether it has contributed one-fifth or 
three-fifths of our progress — depending on how they 
allow for education — still that's where economic 
growth comes from — technology. While we perhaps 
can't measure it quantitatively, we know that it is so 
and we recognize the success in the adaptation to 
and the exploitation of technology to meet human 
needs. 



I think we haven't made a quantum jump into a 
brand new kind of world with our new technology, 
but we have a long experience of making use of tech- 
nology. Our pace may be faster now than before, so 
that we have to learn to adapt ourselves faster than 
before or run greater risks of not adapting, but we 
can still learn from the past. Economists who plot 
growth rates find that they are faster now than they 
were- — but it is four percent per year instead of 
three, or perhaps four-and-a-half percent instead of 
three, rather than some brand new order of rate of 
change that we are experiencing. 

The Characteristics of Trade and Investment 

A second way in which it seems to me we need to 
see things whole — and this, too, was stressed by sev- 
eral of the speakers — is that international trade and 
investment are really only aspects of or extensions 
of trade and investment as a whole. Economists may 
be partly to blame for having made the study of 
international trade such a very special thing as if an 
export were quite a different thing from ordinary 
shipments say from Buffalo, New York, to Atlanta, 
Georgia. They are very similar things, and while na- 
tional boundaries are there and matter — matter very 
much to lawyers, matter very much, too, for certain 
tax purposes and so on — still the essence of the way 
in which technology contributes to the quality of life 
is quite general and can't be viewed as different in 
its international trade and investment aspects than in 
domestic trade and investment aspects. 

Viewing Economics Globally 

Finally, I think Mr. McLuhan has impressed 
upon us that the world has become really a global- 
sized village and we can't so readily take partial and 
private viewpoints of the needs of the world. We 
have to think, really, of the thing as a whole, now. 
We are doing that more and more, and one reason 
we have moved ahead rather successfully in an eco- 
nomic and technologic way during the two decades 
since World War II is that we have been taking an 
over-all view. It is true in the field in which I work, 
international economic policy; and, incidentally, I 
think that the extent to which we profit by tech- 
nological advance is importantly conditioned by 
whether we follow sensible or foolish economic poli- 
cies. 

People talk of competitiveness, but you can't talk 
of that in technological terms alone; it has to do 
with prices and exchange rates as well as with physi- 
cal characteristics of processes. The OECD has been 



25 







JOHN E. REYNOLDS is presently principal Advisor to the Division of Interna- 
tional Finance of the Board of Governors of the Federal Reserve System. He was 
for two years Staff Director of the Review Committee for Balance of Payments 
Statistics, more familiarly known as the Bernstein Committee. He joined the Staff 
of the Federal Reserve Board in 1953 following three years with the Bank for 
International Settlements in Geneva, Switzerland where he served under Per Jacob- 
son in the Monetary and Economic Department. 

Mr. Reynolds studied Economics at Harvard University, receiving his Bachelor's 
degree in 1944 and his Master's in 1950. 



mentioned. It is very encouraging that people go 
regularly from all over the developed world to meet- 
ings in Paris of the OECD to consider together how 
they may jointly improve their policies towards the 
development of technology and also their economic 
policies which bear on the rate at which technology 
can be usefully applied. The very days of this Sym- 
posium are also days for another round of meetings 
for the OECD Science Policy and Economic Policy 
Committees. 

Professor Cooper mentioned two reasons for the 
very rapid expansion of world trade in recent years, 
two among several. One, that trade barriers have 
been lowered, and, two that the pace of tech- 
nological innovation has been rapid. These two in- 
teract very much. We have had to lower the trade 
barriers in order to take advantage of the technology 
and, conversely, by lowering the trade barriers, we 
have broadened the scope of beneficiaries from tech- 
nology. I agree with the Secretary, most heartily, 
that the main task for all of us is to keep things free 
and remove obstacles, as much as possible. 



Can We Learn to Transfer Technology Across 
the Equator? 



There is a tendency to focus on the problems of 
flow of information and technological gaps mainly 
across the Atlantic, whereas in my view, the prob- 
lems are much less serious across the Atlantic 
than they are across the Equator. I hope at some 
point during this meeting that people will take a 
good hard look at the problem of how you transmit 
technology from highly developed countries to less 
developed countries. The challenge is that this needs 
to be done with none of the long experience we have 
had and needed in building up stable governments 
with some support from scholastic research experi- 
ence. Looking back from fifty years from now, the 
real test of our times will have been not whether we 
have got along well across the Atlantic, but whether 
we were able to transmit to the much poorer coun- 
tries of the Southern Hemisphere the means of mak- 
ing progress. 



W&SSSSSSSS&r&Z 



QUESTIONS FROM THE FLOOR 



Dr. Seitz: The session is now open for questions or 
comments. Does anyone wish to start? 

Dr. Melville Green (NBS): I was much stimulated 
by Professor McLuhan's talk. He has ways of de- 
scribing patterns by which we can try to understand 
our current civilization and the one that is rapidly 
bearing down on us. 

However, some of his patterns seem to be some- 
what contradictory and I wanted to ask him to clar- 
ify. In particular, he was discussing our young peo- 
ple and he said that they are learning by discovering 
rather than by sitting in a classroom and being 
taught. 

The image is of a more active pursuit of knowl- 
edge. This was reinforced by his image of the 
hunter. However, toward the end of his talk he men- 
tioned that we all seem to be turning into television 
screens and becoming more oriental and perhaps 
more passive. 

I would like him to comment on what seems to 
me a contradiction, or perhaps one shouldn't at this 



stage of the game look for consistency but rather as 
in modern physics, find complementarity. 

Professor McLuhan: Yes, I wished to indicate that 
the coming pattern in education is moving away 
from instruction toward discovery, just as in busi- 
ness and other organizations generally, people want 
more involvement. It doesn't matter what the age 
group or the operation is. In the same way, children 
today, in their new electric environment, have come 
to expect much more involvement in the decision- 
making and in the learning process. 

I don't say we have done anything about this. I 
didn't wish to indicate that anything has been done 
about this. Nothing has been done. But the children 
are sitting there waiting to be involved in the proc- 
ess of discovery by being sent out into the society in 
small teams to do research, to discover and thereby 
learn. 

Professor Oppenheimer used to say, "There are 
kids playing here on the sidewalk that can solve 
some of my toughest problems in physics because 



256-707 0-67 — 3 



27 



they have modes of perception that I lost forty years 
ago." The idea that you can use children in high 
level research is not something we are doing any- 
thing about. No. It is just a coming possibility, that's 
all. 

The other matter of TV screens refers, not to pas- 
sivity, but to the exact opposite. TV is a profoundly 
involving medium because it takes us inside our- 
selves actively and inquisitively on a kind of a trip, 
as it were. LSD and TV are closely related. LSD is 
merely a physiological analogue to TV, and the 
craze for LSD is nourished by the TV screen. The 
TV screen is not the movie screen, it has nothing to 
do with the old movie camera technique. You see, 
the movie camera extends the eye and takes you out 
into the environment. TV does the exact opposite. It 
takes you inside yourself. 

Existentialism, which came along with electric cir- 
cuitry, began with this interior trip into the darkness 
of our own being. Kierkegaard and Sartre and such 
people are all part of the western movement in- 
wards, for the investigation of the new frontier. 
Paradoxically, the new interior trip is unique and 
singular, is not mass produced; people go on talking 
about mass production and mass education without 
noticing that they each now have the exactly oppo- 
site character. For the young people in our world 
today, movement is toward the unique and the sin- 
gular and away from the mass produced and the 
general. 

So the points that were raised by your question 
are typical of just how difficult it is to discuss the 
matters that are part of our current environment. It 
is much easier to discuss the old rear view mirror 
image than it is to tackle what is right under your 
nose. It is very difficult to discuss the present. I have 
a friend who says the future of the future is the 
present. True, but the difficulty is to see the present. 
Very difficult. 

Dr. Seitz: Another question? 

Professor Rao: We have heard, at this meeting and 
others, discussion of the effects of science and tech- 
nology on international dealing and investments. I 
would like to suggest that the effect of technology in 
the last twenty years has hardly been sensed in the 
developing countries as far as their international 
trade or even their national income is concerned. 

What has been the effect of technology and 
science on the exports of developing countries? How 
far has it reduced their external dependence? How 



far has it reduced the gap between their national 
income and that of other nations? Japan has had a 
remarkable experience, but other nations have not. I 
think it would be very good if some research were to 
be done on that subject and I hope that this sympo- 
sium and others to follow will deal with that. Should 
we not deal also with the more effective utilization 
of the resources already available in developing 
countries rather than weakening those needs and de- 
mands by displacing those resources by synthetics 
and technological substitutes, for example? 

Dr. Seitz: The question, as I think all of you heard, 
is about what the effect of the technological develop- 
ments, since World War II, upon the developing 
countries, treating Japan as somewhat of an excep- 
tion. To what extent have these countries been 
helped or hindered? Moreover, to what extent has 
the development of such things as synthetic textiles 
had a deleterious effect in the natural fiber industries 
of the developing countries? 

I wonder if one of the panelists would care to 
speak to this. Professor Cooper? 

Professor Cooper: I agree very much with Dr. Rao 
that we need careful study of this question. I would 
not, as a preliminary hypothesis, start out with the 
view that the impact of science and technology has 
been nil or close to nil. 

It is true that the great growth in trade in prod- 
ucts having a high technological content has pre- 
dominantly been among industrial countries, leaving 
aside, as he did, the export of capital goods to the 
less developed countries. 

Most of this vast growth of trade has taken place 
among the industrial countries and the less devel- 
oped countries have been in a kind of a backwater. 
Still, one can point to numerous examples where ad- 
vances in technology have contributed to the foreign 
exchange earnings, the additional receipts, of less de- 
veloped countries. Things come to mind like the 
greatly improved strains of rubber which are now 
being produced and exported from Malaya, the de- 
velopment of new and lower grade sources of metal- 
lic ores which due to improvements in the concen- 
tration process and reduction in the cost of bulk 
transport permit earnings from what only a few 
years ago was regarded as worthless dirt. Develop- 
ments in transportation, refrigeration, have stimulat- 
ed the whole banana industry. 

What is striking about the examples that I have 
given is that they all focus on primary products and 



28 



not on manufactured products. What has happened 
is that the growth in exports by the less developed 
countries has been in products with quite a low 
technological content. It would be useful to have 
much more detailed scrutiny of why it is that these 
tremendous improvements in available technology 
have been left relatively to one side in the less devel- 
oped countries and have not affected their manufac- 
turing operations much. 

Dr. Seitz: Any other comments? A question over 
here. 

Mr. Charles Vetter (United States Information 
Agency) : As prompted by Mr. Reynolds' discus- 
sion, I'd like to hear a comment on barriers to the 
movement of knowledge across the Equator. Are 
these barriers attitudinal, motivational, conceptual? 

We see the same barriers domestically in the ur- 
ban problems that we have. There seems also to be 
a parallel between the problems between cultures 
within our own country, like Appalachia or the ur- 
ban slum area, and the problems of international 
movement of trade and technology. 

I would like very much to hear Mr. McLuhan's 
comments on means for influencing the attitudes 
that are the barriers and perhaps on how technology 
can be more effective in our training systems for 
people who are promoting the movements of ideas. 

Dr. McLuhan: Well, sir, that's a big order. It has 
been the traditional function of the arts to train our 
perception. The artist is the only person who can 
look at the present, at new environments without 
fear, and can report what he sees by new patterns 
and new styles. 

The artist has training in perception rather than a 
blood bank or store of values. Pop art today, for 
example, is attempting to tell us what our environ- 
ment itself is — the environment itself has become an 
art form. 

But the training of perception in regard to new 
technologies and their effects has never been under- 
taken, except indirectly by the artist. Someone said 
once, "We don't know who discovered water but we 
are pretty sure it wasn't a fish!" We are all in this 
position, being surrounded by some environment or 
element that blinds us totally; the message of the 
fish theme is a very important one, and just how to 
get through to people that way is quite a problem. 

We have from the moment of birth a fear of the 
new environment. We always prefer the old one. We 



learn by going from the familiar to the unfamiliar. 
In practice, this means whenever we account for the 
unfamiliar, we translate it instantly into something 
we already know. In other words, we refuse to look 
at the unfamiliar. Our built-in mechanisms of cogni- 
tion seem to make it impossible for us to recognize 
the new until we have translated it into the old. 

Now there is a technique for discovering the new 
in spite of our built-in pattern map, and that is by 
inventory. If you make an inventory of all the effects 
of the telephone or radio on a society, you will dis- 
cover a pattern. You have seen the transistor radios 
teaching children to make their own space bubbles 
for privacy. Our kids don't listen to radios; they use 
them as space bubbles for privacy. This has never 
been studied, but the radio, the use of radio as space 
in the space age is the type of thing that is having 
tremendous effect on the lives of the young. You 
can study these effects by inventory, what effect it 
has on clothing, on cars, on schooling and so on. It 
is very difficult to study them by any single concept 
or point of view. 

These inventories yield awareness of new forms 
that you couldn't get by any other means. This is 
also where the young can enter the field of research. 
The young are very good at making inventories of 
their surroundings; they can become hunters by 
roaming the evironment, and at the same time get- 
ting smart. 

Dr. Seitz: I think we have another question here. 

Dr. Melville Green (NBS): Professor McLuhan 
brought before this conference the idea of myths — 
myths as a spring of action. 

Dr. Seitz and Dr. Casimir later on referred to 
myth in the relationship of classical technology to 
science. We heard about the myths of technology in 
developing countries. Myths seem more useful than 
we may wish to admit. Perhaps what is necessary is 
a truer understanding of the positive role of myths. 

Dr. McLuhan: The word myth is the Greek word 
for work. Mythos is a work, and is considered a 
breakthrough. Mythos has a way of explaining some 
event. The myth is a way of explaining a complex 
process in a few phrases. As a technique of explana- 
tion of cause and effect, it is coming back into much 
use. Many of the things we call natural laws or ways 
of describing events are in the old Greek sense of 
the word, myths. 



29 



There is a phrase, "Every breakdown is a break- 
through." This is a mythic form of awareness. Every 
breakdown is a breakthrough, whether it is in pri- 
vate life or in a corporate organization. Whenever 
you break down, you have just encountered a very 
rich untapped potential which creates a new form. 

Dr. Seitz: Near the rear? 

Comment: It seems to me the discussion this morn- 
ing points up a fact which is overlooked in the ap- 
plication of technology in international trade. Be- 
cause we are working in a computer age with things 
happening at electronic speed, we expect everything 
to happen both nationally and internationally at 
computer speed. 

It is evident to many of us that in the applications 
of science and technology in industry that, some 
twenty years after the end of World War II, we are 
just beginning to apply many of the outgrowths of 
military research. 

Dr. Casimir has beautifully pointed out that the 
application of fundamental research has taken any- 
where from ten to seventy years before it found util- 
ity in engineering practice or application. 

We are very impatient to expect that the rapidly 
developing technology is going to be exported and 
accepted to produce great forward strides in unde- 
veloped countries immediately. 

We have to recognize that in these affairs there is 
a time lag, that the precursor conditions of educa- 
tion, of acceptance of technical ideas and the ability 
to use them, have got to come first. When they do, 
then the applications of technology based on funda- 
mental research in the more technologically ad- 
vanced countries will find a fertile ground. There 
will be seeds that will be planted, will grow, and will 



increase the potentials of the undeveloped countries 
to have international trade in technological com- 
modities. 

Mr. Reynolds: I would like to add just one thing to 
that. I think too that the international diffusion of 
technology depends very much on the ability of the 
relevant people in each country to be able to recog- 
nize breakthroughs when they occur, and to adapt 
them to local requirements. This requires a substan- 
tial base of technologically alert people. 

One can draw a distinction here, between those 
who are actually generating new ideas, new products 
or new processes and those who are very quick at 
recognizing the useful developments of others. The 
second is very necessary. 

One of the developments which has taken place is 
the tremendous growth of study abroad, especially 
in science and engineering and some of the social 
sciences. Students converge from all around the 
world on American and Western European universi- 
ties, and this will in the course of time create this 
body of people who can receive and identify, recog- 
nize and adapt innovations that take place else- 
where. 

One of the disturbing results that we have recent- 
ly observed is that the rate of return of many people 
from less developed countries from Western Europe 
and North America to their homeland, is in some 
cases strikingly low. This process of education 
abroad at least to some extent robs these countries 
of some of their best talent. But there is some re- 
turn. It varies a lot from country to country and I 
think we should work toward getting it up. 

Dr. Seitz: Thank you. This morning's session is now 
ended and we shall adjourn for lunch. 



30 



Luncheon Program 



Introduction: 



Mr. Herman Pollack 

Director of International Scientific and Technological 
Affairs, Department of State 



Mr. Pollack: Mr. Secretary and distinguished guests. 

The prospects and problems associated with the 
development of technological capability and the 
movement of technology among nations are now the 
object of serious attention in many countries 
throughout the world. I am sure, therefore, that the 
discussion under way here at this great and venture- 
some symposium will be followed with great interest 
by an international audience of governmental, indus- 
trial and business leaders. 

The need for a better understanding of and more 
factual data on these subjects is abundantly clear. 
This symposium and others that will undoubtedly 
follow will do much to illuminate and clarify this 
most complicated topic. I think you will agree that 
we have witnessed a splendid beginning today to 
what I am convinced will be recalled in subsequent 
years as a landmark meeting. 

The locale for such a meeting could not be more 
appropriate. From its beginnings at the turn of the 
century, the Bureau of Standards has recognized the 



need for international understandings and agree- 
ments in the area of technology and standards. The 
Bureau has been a pioneer in projecting the United 
States into international scientific and technical co- 
operation, and I think these hew laboratories are 
ample evidence that the Bureau does not intend to 
rest on its laurels. 

Along the way, the Bureau has made many 
friends in many lands, and those here today have 
come from many lands. Among them is our speaker 
at this luncheon, Mr. Pierre Uri. He is both a phi- 
losopher and an economist, and I think perhaps the 
combination and the marriage of these two disci- 
plines provides insights very useful to the subject 
that we are here to consider. 

It is an honor and a great personal pleasure to 
introduce to you one of France's most brilliant citi- 
zens and a man who I am sure will be identified 
with the future development of European unity, Mr. 
Pierre Uri, Counselor for Studies of the Atlantic In- 
stitute. 



31 










HERMAN POLLACK is Director of International Scientific and Technological 
Affairs for the U.S. Department of State. During his 25 year career in the Federal 
Government, he first served in a variety of assignments in the Office of Price 
Administration. Following a period in the U.S. Army, he was with the War Ship- 
ping Administration and the Foreign Economic Administration. He began his serv- 
ice with the Department of State in 1946, holding positions as Deputy and Acting 
Executive Director, Bureau of European Affairs; Executive Assistant, Office of the 
Assistant Secretary for Administration; Director of the Management Staff; and 
Deputy Assistant Secretary of Personnel. 

A native of New York City (1919), Mr. Pollack is a graduate of the City 
College of New York, and holds a Master's Degree from George Washington Uni- 
versity. 







i . 



PIERRE URI has made many important contributions to French economic policy 
and to the creation of the European Economic Community. As Economic and 
Financial Adviser to the French Planning Commission under Jean Monnet, he set 
up the first French economic budget in 1947. He was active in the conception and 
negotiation of the Schuman Plan and had an important role in launching the Coal 
and Steel Community. He then made the plans for the Common Market by prepar- 
ing and writing the Brussels or Spaak Report, which served as a basis for the 
Rome Treaties. 

He was a member of the committee which in J 948 produced the report on 
National and International Measures for Full Employment, and in 1957 he was 
consultant to EC LA on a Common Market for Latin America. He has, as well, 
served as a member of two ad hoc committees of the Alliance for Progress. 

He chaired the group which produced the 1958 Report on the Economic Situa- 
tion of the European Community, and then was Chairman of the group of experts 
which studied long term development prospects in the Common Market. Among 
his books, one may cite Partnership for Progress (Dialogue des Continents), A 
Monetary Policy for Latin America, and just published, That We May Govern 
(Pour Gouverner). 

At present he is Counselor for Studies of the Atlantic Institute in Paris. 



Speaker: Mr. Pierre Uri 

Counselor for Studies, Atlantic Institute, Paris, France 

Address: International Competition and Cooperation in Technology 



Mr. Uri: Thank you, Mr. Pollack. 

We have been told this morning that we are in a 
world of accelerating technical progress, that we are 
witnessing some new patterns of trade. The question 
to which we have to address ourselves now is how 
far this change in environment should lead to cer- 
tain changes in our traditional views of policies. We 
might only be in need of some adjustments in tradi- 
tional economic theory, because the old pattern of 
competitive advantage seems now to yield to the 
very fact that there are now people with advanced 
production of something which the others can't 
produce, and that's the most absolute advantage 
which you can think of. 

This doesn't necessarily make for one-way trade 
because, as has been pointed out, this technology 
can be learned, and can lead to a reverse trade when 
it has been learned by people who have lower 
wages. In other words, the way trade is now work- 
ing is by innovation, then imitation, and finally the 
reverse trade. 

Now, we know that this is not new. We have been 
told of the technological advance of Phoenicia and 
of China in the old days, but probably it is now a 
bit broader than it use to be, and people begin to 
be a bit jealous of the ones who have an advance on 
this. Let us be quite clear. It doesn't take technical 
advance to balance one's accounts and the United 
States is the witness to that. But it means simply 
you can balance your external account with a higher 
standard of living. 

The Technological Gap and Its Influence on 
Trade 

If, as some people maintain, there is a tech- 
nological gap, let's not complain about it. If it did 
not exist, the worries of our host, Secretary of Com- 
merce Connor, about the balance of payments might 
be even worse. The real question now before us is 
whether this inequality, if any, is going to be in- 
creased or whether there are appropriate policies so 
that the whole world may benefit. 

Measures of Influence of Technology on Trade 

One point is immediately clear. It is very often 
maintained that the balance of sales and purchases 



of licenses might be a good indicator. I submit that 
any country, except the largest one, is bound to 
have a deficit on this. What is the probability that a 
small country could invent by itself as much as the 
rest of the world? And there is another way not to 
have a deficit, and that is not to buy any license. On 
this basis, the fact that some of our countries have 
deficits on licenses is just a sign that they are inter- 
ested in technical progress and this is all for the 
good. 

But there is another feature which I think is inter- 
esting to mention. Usually when speaking about 
conditions of international competition, it is mostly 
relative magnitudes which matter. In other words, in 
relation to the cost of a product, how scarce is capi- 
tal and how scarce is labor? 

And maybe with the great knowledge resulting 
from research, particularly applied research, the ab- 
solute magnitudes matter. In other words, if you 
have to produce something which is completely new, 
there is a threshold below which you won't be able 
to achieve anything, and I think that this is the real- 
ly new feature which the advance of technology 
brings into the field of international trade. 

Technological "Fallout" 

Now there is another idea which I think is current 
but of which we haven't yet drawn all the possible 
consequences. We all admit that there is so-called 
technological fallout, meaning by that that the re- 
search conducted in one sector spreads to others be- 
cause a lot has to be learned, and orders have to be 
placed, and so forth, thus there is a certain cumula- 
tive effect from research and development. To some 
extent, and within reasonable limits, doing the job 
oneself has more profound effect than purely im- 
porting the recipes. 

In other words, in a world of that kind, we can 
no more think purely of competitive advantage, and 
we have got to think ahead to potential capabilities 
of developing one day something for which one 
hasn't yet the start, and to the cumulative effect 
which may accrue. This is a rather important ele- 
ment which I think reflects even on present interna- 
tional negotiations. I have read somewhere, and I 
wouldn't disagree, that the famous eighty percent 



34 



clause of the Trade Expansion Act was a very clever 
American idea, because, mind you, the products on 
which most of the world's exports are concentrated 
in the North Atlantic area are really science-based 
products. 

But the question is whether there wouldn't be a 
certain case at the beginning for the countries which 
are less advanced to use the infant industry argu- 
ment and have some temporary protection, so that 
they can reap the benefits of things which they will 
do by themselves. 

Foreign Investment Policy 

But the reverse side of this possibility should be a 
completely open policy on their part on foreign in- 
vestment, because you are not going to have it both 
ways. If you want to protect yourself for a certain 
time against imported products because otherwise 
you might never be able to develop them, then you 
cannot protect yourself at the same time against the 
firm which brings the technology with it, giving you 
the possibility of fully using the new techniques and 
filling the market. 

And I am happy to say that the problem of inter- 
national investment, which seemed to be a rather 
hot issue when the Atlantic Institute undertook a 
study of it, is now slowly cooling off. Even the gov- 
ernment of my country seems to have been con- 
vinced by the arguments presented by people who 
don't belong to the majority. And the points which 
are now being made are very reasonable ones, that 
the subsidiary of a foreign company must be free to 
export as is the interest of the host country; that 
there must be no discrimination in the high level 
jobs between the nationals of the country of origin 
and nationals of the host country; and finally, and 
this is probably the easiest thing to say but the most 
difficult thing to conceive, that the host country 
should be fully associated with research. I venture 
to submit that if this symposium could try and de- 
vise some of the criteria according to which some of 
the research could be done in the host country, that 
would serve a terribly useful purpose. 

But, obviously, the real answer to our problem 
lies in what the countries which feel that they are 
less advanced do to restore the balance. 

Advanced Technology and Economic Progress 

On this, there is one remark which I haven't 
heard often enough: there is no direct correlation 
between the efforts on advanced technology and the 
overall rate of economic progress. In other words, it 



is not enough to do everything to make up for the 
lag by concentrating on advanced technology. There 
must be a balance. It depends, of course, on the 
orientation of the research, and it is a moot problem 
how far military technology has civilian spillover. 
There is also the risk that by investing in a certain 
direction, you practically dis-invest in others. 

And I am afraid that there are some European 
countries which have made very courageous efforts 
and have been frustrated, because what it takes is 
also the management to exploit research and the size 
of the market to develop it, which means practically 
that in the European countries that are complaining, 
the remedy is in their hands. 

Cooperative Efforts 

It is the basis on which technological cooperation 
can be organized to be a match to the United States. 
Now, there are plenty of attempts at cooperation 
and I have read that there are even now at inter- 
national or regional levels about three hundred in- 
ternational organizations; I'm sure you could not re- 
cite the list. 

But it is not enough to say that things are done 
jointly. The important thing is how are they done. Is 
it going to be done on a case-by-case basis, negotia- 
ted, revised, finally in some cases abandoned? This 
doesn't create the new environment. Is it going to be 
done by allocating to one industry this, and to an- 
other industry that, so that practically everybody 
gets back the money which he just put in the pot? 
This doesn't create either the , conditions for real 
progress. If Europe is to do something and if the 
notion evoked by the British of the technological 
community means anything, it should be the agreed 
principle that any new development, any new in- 
dustry, any new product is not started on a national, 
but on a common basis. 

Of course, there is one difficulty which we can't 
overlook, which is that, according to products, not 
necessarily the same countries are interested or can 
contribute. In other words, what it might mean — 
and I venture it as a firm proposal — would be an 
agreed option of a right of first refusal for those 
interested countries to join in a product if they can 
contribute something, and this should be done on as 
broad a basis as possible. 

Up to now, let's be frank, most international co- 
operation in technological ventures has occurred in 
a spirit of competition. Two countries come together 
to beat a third one. We could quote an infinite 
number of those attempts. I'm sure everybody rec- 



35 



ognizes that this is not the soundest possible eco- 
nomics. 

Commonalities and Equalities 

Let's begin to conceive of real international 
projects. I'm sure there will come a day when we 
will really wonder that a race to the moon or the 
exploration of the deep earth could be considered as 
something other than a project for the whole of 
mankind because, after all, this is our common earth 
and this is our common universe. On this common 
earth, there is one fact which we have got now to 
face. It is the fact that whereas in our own society 
we are all trying to have more equality of a basic 
sort and more equality of opportunity, we are on the 
contrary faced with the risk of growing inequality 
between nations, in power, in standard of life, and 
maybe even in the development of culture. 

Well, civilization might be defined as the refusal 
of natural inequality of the more brutal sort, and 
what we have done in our society is to refuse brute 
force so that other values may emerge. This is now 
the challenge before us. 



How have we been able to establish more equal- 
ity? First, by the rule of law, secondly by the group- 
ing of the weaker. And we are now coming to the 
idea of solidarity to assure at least a minimum to 
the underprivileged. 

We now have to go over from our own national 
societies to the international one with the same prin- 
ciples and the same efforts. 

Technology and Destruction 

One point has been omitted up to now, and I 
agree that it didn't belong in the title of this confer- 
ence or as part of the agenda. It is the terrifying 
contribution that technology can also make to the 
power of destruction. Against that background, if 
we accept the philosophy which equates civilization 
to research for growing equality, an equality which 
is no more a word but which we begin in fact to 
have the means to achieve, we may very well save 
ourselves, to reiterate Secretary Connor's final 
words, by thinking in terms of mankind. 




36 



November 16, 1966 



Afternoon Session — The Impact of International Measurement Conventions, Norms, 

and Standards on World Trade 



Mr. Stern: Ladies and gentlemen. This afternoon's 
session is one that is critical to the principal role of 
our National Bureau of Standards. It is equally criti- 
cal to other bureaus of standards around the world; 
many of them are represented here. Our chairman, 
this afternoon, is a man who not only speaks the 
language of standards, fluently and without accent, 
but is also one who is continually contributing to the 
vocabulary of the standards world. 

It is a great pleasure to introduce the fifth direc- 
tor of the National Bureau of Standards, also the 
person who planned and executed this project, the 
creation of these new laboratories which now stand 
as the culmination of his efforts during 14 years as 
Director of NBS: Dr. Allen V. Astin. 



Dr. Astin: Thank you very much, Mr. Stern. Distin- 
guished guests, our topic this afternoon is The Im- 
pact of International Measurement Conventions, 
Norms, and Standards upon World Trade. Our 
speakers and other experts from several countries 
will express their views on this subject. 

Personally, I believe that standards underlie all 
types of communication and exchange. The common 
dictionary type of definition for standards is "that 
which is accepted for current use through authority, 
custom, or general consent." In this context lan- 
guage, of course, is the oldest standard we have, and 
the most fundamental standard for all communica- 
tion. 

More sophisticated types of communication also 
require standards. Telegraph systems, radio systems, 
television systems, and even the automatic data 
processing systems that were talked about earlier to- 
day, are all reaching the stage where adequate 
standards are a critical factor in their more efficient 
and effective utilization. 



Standards in Science 

Among scientists and engineers, communication 
or exchange of quantitative information depends 
upon the availability of generally accepted units to 
which the measurements can be referred: the stand- 
ard is merely a physical embodiment of one of the 
units of physical science or engineering. Fortunately, 
we have, through efforts beginning at the time of the 
French Revolution and culminating in the Treaty of 
the Meter in 1875, an effective international system 
of units in which we can express the quantitative 
language of science on a compatible, under- 
standable, coherent basis. 

Nearly all technologically sophisticated nations of 
the world belong to this convention of the Meter. 
The standards carried out under this Treaty support 
the traditional types of commerce and trade, where 
it is necessary to have units and standards to which 
quantity can be referred. 

Standards in Trade 

The association of standards with trade is ex- 
pressed, quite significantly, in the United States 
Constitution, which links together in one phrase both 
halves of the normal commercial or exchange proc- 
ess. In our Constitution, the Congress is given au- 
thority "to coin money, regulate the value thereof, 
and fix the standard for weights and measures." It 
is in that context of the utilization of standards in 
trade that we will be concerned this afternoon. 

Modern technology has brought into the market 
place a wide variety of very sophisticated products 
whose characteristics can only be specified through 
extensive types of measurement systems. It is helpful 
in the buying and selling and production of such 
products to have standards for the performance or 
the evaluation of such products. These types of 
standards and their impact on international trade 
will constitute the major part of our discussion. 



37 




ALLEN V. ASTIN was born in Salt Lake City, Utah, in 1904. He received his 
bachelor's degree in physics from the University of Utah in 1925 and his Ph.D. 
from New York University in 1928. From 1928 to 1930 he was a National Re- 
search Council Fellow at Johns Hopkins University. 

Dr. Astin joined the staff of the National Bureau of Standards in 1932. His 
principal fields of work included precision electrical measurements, the develop- 
ment of early radio telemetering techniques, and during World War 11 the develop- 
ment of proximity fuzes. He was .named Chief of the Bureau's Ordnance Develop- 
ment Division in 1948. The President appointed him as the fifth Director of the 
National Bureau of Standards May 31 , 1952. 

He serves as the U.S. member on the International Committee of Weights and 
Measures and as Chairman of the Standing Committee of the Federal Council for 
Science and Technology. 



The World Trade Picture 



Dr. Astin: Our first speaker this afternoon is Mr. 
Francis K. McCune, who is Vice President of the 
General Electric Company. 



Mr. McCune: Dr. Astin and ladies and gentlemen. 
Let me begin with a little philosophy. It is hard to 
tell, of course, where standards started. It is fairly 
clear that monkeys and even the higher primates 
don't need standards. Even at a still higher level, 
there was little need for standards when each family 
produced its own food, its own clothing, its shelter 
and was self sufficient unto itself. But beyond these 
stages, standards are absolutely necessary, and this 
has been recognized since prehistoric times. With 
civilization comes exchange of goods and services, 
barter or trade — and standards. 

Let me point out here that I am not really talking 
only about standards like those of time, dimension, 
weight, money, and so forth. Fundamental as these 
are, standards go far beyond these essentials. Stand- 
ards as we know them today usually cover the fol- 
lowing: 

definitions, so that buyers and sellers speak a common 
language; 

mechanical or electrical specifications, so that compo- 
nents may be freely interchanged; 

safety requirements, so that society's interest may not 
be compromised by transactions between individuals; 
composition, properties, and methods of test standards 
for materials, for processes and for devices; 
minimum performance specifications, so that the user 
may know in simple terms what the product will do. 
Minimum because enlightened buyers are looking for 
increased values through performance above standard. 

If you will permit me one more observation, while 
standards usually involve compromise, as does the 
art of politics, they are in toto, I believe, the best 
index, the most coherent summary of technical 
knowledge in existence today. 

These, then — definition, interchangeability, safety, 
properties, and methods of test, and performance 
levels, are basic to trade — and without trade, civili- 
zation as we know it is impossible. 



So let us look at some figures on trade itself. To- 
tal world trade has been rising steadily since the end 
of World War II, and has doubled during the last 10 
years to an estimated total of $200 billion in 1966. 
Most of the growth in trade has been among the 
countries that are well developed industrially. The 
total of world trade appears to be growing exponen- 
tially. 

There is substantial trade between developed and 
undeveloped or under-developed countries, or 
among under-developed countries. I believe, and I 
believe all of you believe, that trade in these areas is 
going to increase greatly. Hence, I think we are go- 
ing to see an acceleration of this rather exponential 
advance in world trade. 

But I think that there are other things that we 
must look at. I think that growth in technology will 
also stimulate more trade. The amount of the 
growth from this cause will depend to a great extent 
on a number of countries and people that are able 
to make use of the products which the new technol- 
ogy provides; but I hope and believe that interna- 
tional trade will grow from this factor much faster 
than in the past. 

There are many factors that affect international 
trade, including tariffs and a variety of other bar- 
riers, as has been mentioned this morning, to the 
free exchange of goods among nations. The main 
purpose of the several common market schemes 
around the world is to eliminate these trade barriers 
where it is feasible to do so. 

Importance of International Standards 

Lack of standards and differences in standards 
have long been very troublesome barriers. Fortu- 
nately, most countries now recognize that the devel- 
opment and use of international standards will go a 
long way towards the removal of such barriers. This 
growing interest in international standards is appar- 
ent in the expanding work of the ISO and the IEC. 
There is no question but that international standards 
will more and more become the commercial docu- 
ments by which future international trade will be 
conducted. We are already seeing evidence of this: 

The OECD recommendations on development and 
use of international standards in its 1964 progress 
report. 

The EEC and EFTA arrangements to harmonize 
their standards. 

CEE and its effort to have common electrical safety 
standards throughout most of Europe. 



39 




FRANCIS K. McCUNE is Vice President of General Electric Company. In this 
position, he is responsible for a program designed to assist operating management 
in the making of major business decisions. Mr. McCune has been with the General 
Electric Company since graduation, holding many and varied assignments in engi- 
neering and general management. He has been responsible for GE's participation 
in atomic energy programs, including operation of major government-owned instal- 
lations, establishment of the Company's own nuclear facilities and development of 
its business in that field. He was elected a company Vice President in 1954, and in 
I960 became Vice President-Engineering and a member of the Company's Execu- 
tive Office. He assumed his present position in J 965. 

A native of Santa Barbara, California (1906), Mr. McCune received his Bache- 
lor of Science Degree (cum lande) in 1928 from the College of Electrical and 
Mechanical Engineering of the University of California at Berkeley. 

Mr. McCune was Chairman of the National Society of Professional Engineers' 
President's Council of Industry Engineering Executives, is a member of the Na- 
tional Academy of Engineering and is the new President of the United States of 
America Standards Institute. 



Use of international standards by NATO and other 
treaty organizations. 

Use of international standards by the developing 
countries. 

The slope of those curves we looked at a moment 
ago shows that all our people must engage in world 
trade or sink to the position of small and insulated 
markets. 

Standards and Developing Areas of Technology 

But beyond trade in being, let us look at some 
rapidly expanding areas of engineering development 
which will have, or are beginning to have, a major 
effect on trade. 

Man above all animals communicates, learns and 
records. To communicate, he travels purposefully, 
and in this century man has increased his speed of 
travel at least tenfold on land and fortyfold on 
water. Can you imagine automobiles in widespread 
use without standards? Standards for materials, for 
dimensions, for performance measurement, for inter- 
changeability, for the tools used in their manufac- 
ture, even for the plants in which they are built. The 
Society of Automotive Engineers alone has issued 
well over 2,000 standards. 

Can you imagine airplanes without standards? 

I am told that even a revolutionary new concept 
in airplane design uses many thousands of stand- 
ards. If it did not; the plane could hardly be pro- 
duced at all. The Aerospace Industry Association in 
this country has issued over 2,000 standards, and 
yet both automobile and aircraft freely use ASTM's 
over 3,000 standards, as well as electrical standards, 
mechanical standards, government standards and 
many others. 

Let me remind you that a single standard covers a 
multiplicity of things. For example, typical of the 
Institute of Electrical and Electronic Engineers, 275 
standards are — these are just at random: 

A guide for operation and maintenance of turbine 
generators, which covers 5 methods of temperature 
measurement, 4 standards on loading, 24 require- 
ments on machine operation, 25 inspection and 
maintenance procedures on 7 different types of tur- 
bine generators. 

Transmission performance of telephone sets, 
which contains 15 standards for test equipment, and 
10 test procedures covering 30 different types of 
tests. 

Industrial control apparatus, which covers 17 
groups of products with 4 different types of control 
equipment, with 7 general standards on equipment, 
with 5 types of interruption, with 1 1 types of capac- 



itors, 5 classes of resistors, and 12 types of enclo- 
sures, for a total of more than 200 standards for 
individual devices. 

In addition, there are individual standards on an- 
other 1 12 devices, so I could go on but I won't. 

Man's power to communicate brings us also to 
the telephone, the radio and television. These are 
media of mass communication and prime examples 
of standardization; and again the materials used, the 
components, the major processes, the means of 
specifying and describing them all involve stand- 
ards, as well as the standards truly pertinent to tele- 
vision as such. 

Man's ability to record has been primarily by 
memory and by writing, and these involve language. 
Language itself is not considered a standard, but is 
it not really as close to a standard as one can come? 
Certainly it involves definitions and rules for inter- 
changeability, and now we have machine languages 
which may in the end have even greater impact. 
Suffice it to say that machines which talk to each 
other and to objects in outer space know no pride of 
nationality, and their language must be standardized. 

So we see that man's peculiar abilities have in the 
past century been enhanced manyfold by concepts, 
systems and devices which involve standards and 
which in many ways are dependent on standards. 

But let us shift a moment, however, and look at 
progress, past and maybe future, from a viewpoint 
of science and engineering. The scientist examines 
the processes and forces of nature with the hope 
that he can understand them and hence can usefully 
predict beyond the limited range of his ability to 
observe and record. Usually he resorts to measure- 
ment to gain his knowledge, and standards are the 
very essence of measurement. Without them the 
scientist would be at a loss to conduct his experi- 
ments, and even more to communicate them to any- 
one. 

The engineer seeks to use knowledge of nature's 
behavior to produce things useful to society. Let us 
look here at the recent past and conjecture a little 
concerning the future in this field. Each one of us as 
an individual views progress through a different 
screen, and we classify it in different ways. So let me 
talk about the exciting technical achievements of the 
past forty years as I personally have seen them. 

Recent Technological Developments 

As I left college, the exciting fields to me were 
large machines, and in particular the problem of ac- 
curate theoretical prediction of performance, which 



41 



was necessary for a sound design basis as the sizes 
began to get big; telephone communication theory 
and practice; tall buildings; high voltage, high fre- 
quency and high-current phenomena; deep well ex- 
ploration of our oil fields. At the same time, as 
I can remember when I left college, farther out were 
the development of radio, including high power tran- 
mitters, sensitive receivers, high gain antennas, high- 
frequency techniques; direct-current power transmis- 
sion; diesel engines, and in particular the problem 
of smooth, specifically timed injection which was 
critical to efficient performance. 

These continued to cast their spell, I think, until 
late in the '30's, when radio and electronics began to 
come into their own. Television was in its very em- 
bryonic stage. There were no common agreements 
on systems to be studied. Mechanical scanners were 
still competing with crude cathode ray scanners and 
image tubes. Control was moving from its primitive 
state. Systems engineering was being recognized, and 
with it the ability to engineer units too complex for 
the single human mind to comprehend. 

To many of us then came war and with it concen- 
tration on such technical fields as aircraft, aircraft 
propulsion, control using the speed and versatility of 
electronics for many purposes. Also, the develop- 
ment of feedback theory and its application to all 
sorts of automatic controls, such as fast acting gen- 
erators, voltage regulators, steel and paper mill 
equipment, and gun-pointing; fully automatic track- 
ing radar; great advances in communication and the 
use of electronics for recognition and ranging; mi- 
crowave radio technology — in essence, the marriage 
of radio and optical theories; infrared technology 
applied to the problem of seeing in the dark; in- 
creased development of analog, and finally digital 
computers, and so forth. And with these came nu- 
clear energy devices. 

Postwar we saw television for the general public, 
which would have been totally impractical without 
brilliant and painstaking standardization work; fan- 
tastic increases in speed, size, and range of aircraft; 
application of sophisticated controls to industry gen- 
erally; rocket engines, not completely new but an 
accepted engineering challenge of that time because 
of wartime needs and new technology capabilities; 
the further development of electronic and analog 
computers; a whole realm of semiconductors and 
circuitry, including transistors; the work of making 
nuclear energy useful to peaceful society; and, only a 
few short years ago, the beginning of our conquest 
of space. 



Of these, three great waves seem to me to stand 
out — electronics, nuclear energy, and space. Today 
we do not know what the next such wave will be but 
many believe it is here already and it is the informa- 
tion revolution. 

The United States of America Standards 
Institute 

Let me pause to remark that for these reasons as 
well as many others, the new United States of 
America Standards Institute has come into being. 
The American Standards Association had a long and 
distinguished history in inspiring and certifying na- 
tional standards. The new United States of America 
Standards Institute will build on this foundation. It 
retains the principles of voluntary standards, with 
participation of all the affected segments of society 
and arrival at a consensus, but is planned to go 
beyond the American Standards Association in its 
membership. It is reaching into truly affected sectors 
of society in its ability to participate in international 
work. That ends my commercial for USASI. 

Future Developments in Technology 

Returning to my theme of engineering, what do 
we see for the next 10 or 20 years or even sooner? 
Well, this business of predicting is a bad one. I had 
a boss once who told me what to do on a podium. 
He said that if you ever have an experiment to per- 
form, first perform the experiment and then tell the 
audience what they saw. Any other course is disas- 
ter. Well, there is a lot of truth in this, and I can 
remember very well that some years ago utilities in 
our country asked my company and another to pre- 
pare a movie which would be of interest to high 
school children and might give them some incentive 
to consider science and engineering as a career. 
They asked for it to be not just held down to facts 
but quite far looking, and we put some rather ab- 
surd things into this after a lot of thought, far out; a 
substantial part of this movie was man landing on 
the moon in the year 2000. That's the fact. 

Well, returning to my theme of engineering, what 
do we see for the next 10 or 20 years or even 
sooner? Supersonic transports, of course; communi- 
cation by satellite as the rule worldwide, not the ex- 
ception; exploration of the moon and space by in- 
struments and by man; the use of space capability 
for the betterment of mankind, including navigation, 
air and sea traffic control, economics and dependa- 
ble point-to-point communication; mass communica- 



42 



tion, especially for educational purposes, for use in 
under-developed countries; longer range weather 
prediction by means of space data gathering capabil- 
ity and advanced electronic computer modeling of 
global circulation; assessment and control of agricul- 
ture, water resources, mineral resources, wildlife and 
forests, through space observations over a wide 
range of frequencies and using many kinds of sen- 
sors; unlimited resources of economical power; some 
say the electronic home, with the library, the paper, 
the store, the business system, where the individual 
needs in the way of information or communication 
are at his fingertips in his home. 

Some say that we are in a materials revolution, no 
longer dependent largely on nature, to be able to 
create exactly what we need for our structures, our 
machines, and our systems. 

Some say the wave of solid state devices is in 
itself a revolution. 

We look to understanding and beneficial control 
of climate in the less favored parts of the world, the 
arid and arctic regions; understanding of the 
influence of the sun on the earth as it affects 
weather, magnetic storms, communications, and so 
forth; understanding of the earth's interior and crust, 
primarily for the prediction in time to give people 
protection from disasters, such as volcanoes, earth- 
quakes, and tidal waves; cities without traffic jams 



or bankrupt commuter railroads and subways; and 
related to this are clean air, clean water, and no 
unsightly dumps, no junk yards to beautify; hospi- 
tals and schools in which the nurses, doctors and 
teachers would be freed of drudgery and have time 
for the human aspects of their jobs; unlimited food 
for the hungry people of the world from a better 
understanding and integration of marine biological 
resources, biological fermentation of cellulose or 
similar processes; understanding, occupation and use 
of the world that lies beneath our oceans. 

These are the things that fascinate our college stu- 
dents today. Yet through all these run two common 
themes. They are wanted worldwide and they are 
wanted soon. 

Let me submit that if the fruits of the foregoing 
are to be available as well as wanted worldwide, 
much needs to be accelerated in our worldwide 
standards work, for each major achievement re- 
quires standards, sometimes for the acceptable cost 
made possible by a worldwide market and often 
even to be useful at all. 

To come soon, they must be accomplished by the 
fewest people. Each must not be engineered from 
the ground up. Each must build to the fullest extent 
on the compendium of knowledge and accomplish- 
ment embodied in worldwide standards. 

My conclusion is that we have lots of work to do. 



43 



256-707 0-67-4 



Dr. Astin: I think it might be better if we hear the 
second speaker and then ask for questions on both 
papers. Following that, we will take a brief recess 
and then call for formal comments by four discus- 
sants who are prepared to do this. 

Our next speaker is Arthur Henry Ashford Wynn, 
who is the head of the Standards Division in the 
Ministry of Technology of the United Kingdom. 

Mr. Wynn will talk to us on the subject, "Techno- 
logical Barriers to World Trade." 



Mr. Wynn: Dr. Astin, ladies and gentlemen: The 
decision to hold a symposium on technology and 
world trade to mark the dedication of the new labo- 
ratories of NBS raises the expectations of all coun- 
tries. This great enterprise, together with the estab- 
lishment of the U.S.A. Standards Institute mark, we 
believe, a change to a higher energy level in Amer- 
ican standards activity with which I and the other 
people from abroad are honored to be associated. 

Since last year we have also been awaiting over- 
seas with much interest the implementation of the 
LaQue report, a document that has contributed to 
all our thinking. 

Standards as Help or Hindrance to 
Internationa] Trade 

All standards record a consensus. Standards codify 
the wisdom of many. There are now about a thou- 
sand standard recommendations of IEC and the 
International Standards Organization, ISO, record- 
ing a world consensus on a remarkable range of 
detailed topics. These include standards for machines 
and materials, methods of test and analysis, and 
means of communication, including glossaries, codes 
and units. No other area, as Mr. McCune has said, 
of human affairs has produced such an extensive 
and detailed record of consensus. There are, how- 
ever, many thousands of national standards, often 
enforced by legislation or national exclusive testing 
or approval arrangements. These national standards 
quite frequently offer formidable barriers to trade 
between countries. 



It is a thesis of this paper that it is urgent for 
technologically advanced countries to exercise more 
leadership in extending the world technological code 
embodied in world standards, and that it is in the 
interests, both of advanced and developing coun- 
tries, that this should be done. This great occasion 
offers us the hope that these new laboratories will 
contribute to this purpose. 

Information on standardization is manifestly more 
important to smaller industrialized countries which 
devote a higher proportion of GNP to exports. For 
example, the United Kingdom exported 14 percent 
of its GNP in 1 964, while the U.S.A. only exported 
4 percent. In the same year, the. Netherlands ex- 
ported 35 percent. 

Of course, the flow of trade between the States of 
the U.S.A. is not international trade and is subject 
to few restrictions. In contrast, the flow of trade be- 
tween the States of Europe is international and sub- 
ject to many obstacles. Who can doubt that the im- 
pediments that there have been in Europe to the 
free movement of people and goods provide at least 
a small part of the explanation for the lower stand- 
ard of living in Europe compared with the U.S.A. 
Differing standards, both voluntary and compulsory, 
are obstacles to trade that are often overlooked in 
the preoccupation with tariff barriers. 

International standardization is necessary for the 
removal of barriers which often impose more restric- 
tions on trade than do tariffs, but the profit to be 
harvested from international standardization is al- 
most certainly greater in Europe than in the U.S.A. 
Europe has the larger problem but the less saturated 
markets. However, all countries, including the 
U.S.A., are becoming more dependent upon their 
foreign trade. 

Harmonization of International Trade 

Where is the driving force for increasing the pace 
of international standardization activity? One great 
force is that of the Common Market countries, anx- 
ious to harmonize their trade. These countries, with 
a total population similar to that of the U.S.A., have 
what may be described as an economic gravitational 
field. The United Kingdom and other members of 
the European Free Trade Area are within that field, 
in orbits of apparently diminishing diameter. 

The developing countries, anxious to benefit from 
the best advice and to reduce the difficulties of mul- 
tiple standards from which they already suffer, are 
another force. An increasing number of developing 
countries, particularly the new African states, are 



44 




ARTHUR HENRY ASHFORD WYNN is Head of the Standards Division in the 

Ministry of Technology of the United Kingdom. 

Born in 1910, Mr. Wynn received his education at Oundle School and Trinity 
College, Cambridge, where he was an Entrance Scholar in Natural Science and 
Mathematics. After granting of his M.A . Degree, he qualified as Barrister-at-Law. 

He worked for A. C. Cossar Ltd. in the electronics field from 1939 to 1948, at 
which time he assumed the position of Director of Safety in the Mines Re- 
search Establishment of the Ministry of Fuel and Power. From 1955 to 1965 Mr. 
Wynn was Scientific Member of the National Coal Board, serving at the same time 
as a member of the Advisory Council on Research and Development of the Min- 
istry of Power. He was also a member of the Safety in Mines Research Advisory 
Board during the period 1950 to 1965. 



within the gravitational field of the Common Mar- 
ket. These developing countries will generally adopt 
international standards and not the standards of any 
particular developed country. 

The greater concern of Europe with international 
standardization is to be seen in the location of the 
secretariats of the ISO and IEC technical commit- 
tees. Of the 242 ISO technical committee and sub- 
committee secretariats, the six countries (Belgium, 
France, Germany, Holland, Italy, Luxemburg) of 
the European Economic Community (EEC) to- 
gether hold 119, the United Kingdom 38 and the 
U.S.A. 60. Of the 133 IEC technical committee and 
subcommittee secretariates, the European Economic 
Community (EEC) holds 69, the United Kingdom 
26 and the U.S.A. 13. The United Kingdom, repre- 
sented by the British Standards Institution, has been 
among the first two or three nations in its con- 
tribution to international standardization at all 
times. There are also international "Standards" or- 
ganizations, for example, the International Organi- 
zation for Legal Metrology (O.I.M.L.) to which the 
United States has not hitherto belonged. 

I cannot claim to understand all the obviously se- 
vere restrictions on the full participation of the 
U.S.A. in world standardization in the past. 

The elimination of the barriers between the six 
Common Market countries and the removal of ob- 
stacles to trade are express purposes of the Treaty 
of Rome, which established the European Economic 
Community or Common Market. This is part of the 
process now generally known as harmonization. The 
acceleration of standardization has been interpreted 
as an essential part of this policy of harmonization. 
The Treaty of Rome is removing all barriers to 
trade within the Common Market due to differing 
national standards, disparate legislation or purely 
national testing or certification arrangements. The 
initiative in international standardization comes, 
however, mainly from the individual countries rather 
than from the organization of the Common Market. 

We are reacting to this in the United Kingdom. 
The confederation of British industry, which is a fed- 
eration of all trade associations, speaks for British 
industry as a whole and has urged the British Gov- 
ernment to "support, and be seen to support every 
attempt to secure international alignment of stand- 
ards in the appropriate international forum. It 
should, moreover, both in its own legislation and in 
its procurement policies, give the strongest support 
to acceptance of internationally agreed standards as 
British standards without deviation." 



The seven countries of the European Free Trade 
Area have been much concerned that the deliber- 
ations within the Common Market should not lead 
to new obstacles to trade between the two blocs, and 
the seven governments who belong to the Council of 
Ministers agreed at Bergen in May 1966 that: "The 
Ministers should give strong encouragement to in- 
dustries, departments, and to standards bodies to 
pursue the objective of early agreement on standards 
in the European and, where appropriate, in the inter- 
national standards organizations. 

The national standards bodies should be pressed 
to make the strongest efforts to secure full acceptance 
of these agreements in national standards without 
deviation, and public purchasing departments should 
be urged to take full account of such standards." 

The standardization activity of the Common Mar- 
ket countries is not only of concern to Europe be- 
cause the results influence the deliberations of ISO 
and IEC very quickly and are indeed often intended 
to do so. European countries are strongly represent- 
ed on every committee and therefore are in a good 
position to influence ISO deliberations. 

Technical Areas Affected by International 
Standardization 

The pace of international standardization is in- 
creasing. In the last 10 years ISO produced about 
500 recommendations. It is hoped to produce over 
100 in 1966 alone. ISO is being expanded, and it is 
planned to produce 200 in 1967 and more than 300 
recommendations a year from 1969 onward. 

On what subjects is this international standard- 
ization activity particularly concentrated? The great- 
est activity in most countries is concentrated on 
compulsory national standards. It is widely believed 
that these national standards enforced by law are 
the greatest of all obstacles to international trade. 
These standards have received the special attention 
of working parties of the Commission of the Com- 
mon Market under the general heading of "Obsta- 
cles to trade arising from provisions of a technical 
order." These working parties have, for example, 
produced 12 Council Directives concerned with mo- 
tor vehicles and 5 with agricultural tractors. 

Motor Vehicles 

Conformity with these standards is likely to be- 
come essential to any manufacturer wishing to sell a 
vehicle or tractor within the Common Market. 
Alignment of EFTA with Common Market stand- 
ards and extension to African associated States and 



46 



Greece and Turkey may increase the purview of 
these directives eventually beyond the six members 
of the Common Market. 

These motor vehicle and tractor standards have 
built into them operational experience, engineering 
knowledge and research results. They also record a 
consensus about the price that is worth paying for 
increased safety. There seems to be no good reason 
why motor vehicle standards vary much from one 
country to another. Certainly the greater the pool of 
experience, knowledge, and research results under- 
pinning the standards, the better they are likely to 
be. 

There is everything to be said, therefore, for dis- 
cussing such standards in as wide a forum as possible 
and for a constructive dialogue between Europe 
and America, with a pooling of wisdom and experi- 
ence. Indeed, the failure of this dialogue to proceed 
fast enough in the past and the unilateral action on 
both sides of the Atlantic already taken or about to 
be taken, seem certain to result in substantial 
further losses in trade to most manufacturers. 

Twelve years ago it was only necessary to 
produce two versions of an automobile for sale to 
Europe. Today, in spite of excellent work of the 
Economic Commission for Europe, it is necessary to 
produce 9 or 10 versions. The barriers to trade are 
growing. Regulations governing motor vehicle design 
are essential but it is not clear that anyone benefits 
from compelling manufacturers to produce a dozen 
different designs for different markets. Nor is it clear 
that the cost of international negotiations could ever 
be at all comparable to the losses to countries, in- 
cluding the United Kingdom and the U.S.A., who 
manufacture motor vehicles, caused by disparate 
regulations, and motor vehicles are, of course, only 
one area where trade is impeded by disparate regu- 
lations. 

Foodstuffs, Food Preservatives and Proprietary 
Medicines 

The Council of the Common Market has issued 
directives concerned with coloring matter in food- 
stuffs, food preservatives, and proprietary medicines. 
Directives concerning preservatives, for example, 
came into force in November 1965. The directive 
explains that it "is necessary with a view to the free 
circulation of commodities intended for human 
food," but the primary concern, of course, is with 
free circulation within the Common Market. More 
than a quarter of the world's trade is in this area of 
food and drugs. Every country has its food and 



drugs legislation, and it can be sound only if based 
upon research that is generally costly, indeed, so 
costly that it can only be afforded by the most ad- 
vanced nations. There is everything to be gained by 
aiming at a world consensus about each individual 
coloring matter, insecticide, herbicide, preservative 
or drug. 

The advanced nations generally need world mar- 
kets to help pay for the research and if expensive 
duplication of research beyond the means of most 
nations is to be avoided, then the smaller and poorer 
nations must rely on the research undertaken by the 
few. 

The international standards for food and drugs, 
including insecticides and herbicides, are of primary 
economic importance and must be a major object of 
future research. 

Safety and Health 

Insofar as the purpose of technological advance is 
improvement in the human condition, then the im- 
provement of safety, health, and amenity are an es- 
sential part of that purpose. In the standardization 
activities of governments, and these European gov- 
ernments in particular, there is nevertheless a double 
motivation. There is the urge for harmonization in 
order to satisfy the need of modern industry for a 
large market, a need that flows from the economies 
of scale and from the falling real cost of transport, 
due in part to the increased value of many manufac- 
tured goods per unit weight. Harmonization is a 
profit-generating activity, more, particularly for the 
large, low cost producer. This is the first motive. 

Harmonization has, however, to be consistent 
with the public will for promotion of safety, health, 
and amenity, which has been government's tradition- 
al concern with standards. This public will provides 
the second motive. 

The formidable barriers to trade have resulted 
from compulsory national standards and have not 
generally been erected primarily to protect indige- 
nous producers but have resulted from the essential- 
ly national or even local character of legislation con- 
cerned with health, safety, and amenity. This 
legislation will remain national and local. The bar- 
riers to trade can still be removed if legislation is 
increasingly based upon international standards. If 
there is adequate international cooperation to ensure 
that these standards reflect the best possible world 
opinion, then the quality of the local legislation may 
often advance more rapidly than hitherto. 



47 



Many barriers to trade cannot be removed by in- 
ternational standardization alone. It is also essential 
to have international testing and inspection conven- 
tions. This is necessary because the screening out of 
equipment that is unsafe or dangerous to health 
should not be left to market forces but should be 
made the job of an expert organization backed by 
national legislation. 

The difficulties of exporting any kind of pressure 
vessel to many countries of the world, including the 
U.S.A., are well known but are still daunting. This is 
a very old problem. The United Kingdom now has 
reciprocal testing and inspection arrangements for 
pressure vessels with a number of European and 
Commonwealth countries, without, however, having 
yet harmonized the standards. The United Kingdom 
would welcome such reciprocal arrangements with 
the U.S.A. 

Electrical Equipment 

Some of the worst hidden barriers to trade con- 
cern electrical equipment. Almost all electrical 
equipment exported to some countries has to con- 
form in such matters as the adequacy of insulation 
or rise of temperature and has to be approved as 
conforming. 

In the Scandinavian countries a safety mark is 
compulsory by law. In the official showrooms of 
power authority suppliers, in France, only products 
bearing the NF mark are allowed. There are many 
main plugs and miniature plugs. A dozen or so 
different models of radio receiver, vacuum cleaner, 
or electric iron are necessary for export to European 
countries alone. 

There are Common Market directives in draft 
concerning low tension electrical equipment, house- 
hold electrical equipment and portable electric tools. 

The Common Market Commission can rely on 
the ground work that has been done by the Interna- 
tional Commission on Rules for Approval of Elec- 
trical Equipment, usually known as CEE. All the 
18 member countries are European, although the 
United States has sent observers to meetings for the 
last 17 years. The CEE is a powerful code-making 
organization, concerned not only with safety stand- 
ards for electrical equipment but with compatibility, 
and it is perhaps likely in the future to be increas- 
ingly concerned with standards of quality and relia- 
bility. We do not understand why the U.S.A. has felt 
for 17 years unable to give full support to this bar- 
rier-removing organization. 

Conformity with performance requirements can- 



not be established by visual inspection, and a stand- 
ard testing procedure is generally needed. The CEE 
will issue a certificate of compliance with CEE 
specifications for any equipment if advised to do so 
by the testing station of the country of manufacture 
and of one other country. The certificate is then ac- 
cepted in all 18 countries. This is an outstanding 
international agreement for reducing trade barriers. 

A few other conventions exist, but very few. The 
British Standards Institution, for example, is recog- 
nized by arrangement with the Canadian Standards 
Association as a testing and inspection body for all 
British electrical equipment exported to Canada. 
There is no such reciprocal arrangement between 
the British Standards Institution and any organiza- 
tion in the U.S.A. What organizations in the U.S.A. 
can be parties to testing conventions with, say, CEE 
or BSI? Is this one of the future roles of the United 
States of America Standards Institute? It will be in- 
teresting to know whether the U.S.A. already has 
any reciprocal testing or certification conventions 
with other countries or whether there are any new 
conventions in mind. 

Quality Assurance and Performance Criteria 

The need for testing conventions is not confined 
to electrical equipment or problems of health and 
safety. There is a great interest in Europe for 
schemes in quality assurance. The distinguished re- 
port of the National Commission on Technology, 
Automation, and Economic Progress, entitled "Tech- 
nology and the American Economy," placed great 
emphasis on the use of a performance criteria as a 
means of promoting technological innovation and 
advance. 

The same emphasis on performance specification 
is evident in Europe and in the United Kingdom and 
is likely to be reflected in international standards. 
The international implications of this great emphasis 
on performance criteria still need, however, to be 
thought through. 

The economic role of performance specifications 
in our competitive market economies also merits 
discussion. Performance specifications can be used 
to reinforce market forces and strengthen the market 
economy, and can also be used restrictively. 

Test specifications may be used only to disclose 
performance facts to buyers, and so to increase their 
power of discrimination. Specifications used in this 
way strengthen and accelerate the action of market 
forces in eliminating the inferior and promoting 
technological advance. This is a role of performance 



48 



specifications which we regard as wholly beneficial 
to a free economy. 

However, test reports that include opinion, even 
expert opinion, can bias consumers' choice, and are 
in a sense restrictive. Performance specifications can 
also provide the basis of legislation. It is a tradition 
in the United Kingdom only to use such legislation 
to promote safety, health, or public amenity, for 
example, under the Factories or Mines and Quarries 
Acts. 

Some new schemes in the United Kingdom direct- 
ly concerned with performance specifications and 
testing already have international implications. For 
example, there is in the United Kingdom an associa- 
tion of big purchasers of instruments, mostly of the 
type used in the processing industries, that "evalu- 
ates" instruments. This is an essentially permissive 
scheme for reinforcing market forces. The instru- 
ments are tested in the laboratories of the Scientific 
Instrument Research Association for conformity 
to performance specifications agreed between user 
and manufacturer. Factual reports are produced and 
circulated to members. The costs of quite expensive 
tests of new instruments are spread in this way over 
the members. There is now a similar association in 
the Netherlands and the recent agreement between 
the United Kingdom and the Netherlands Associa- 
tions to accept each other's "evaluation" reports. 
This is an interesting example of a quality assurance 
scheme that has been established on industrial rather 
than government initiative and on the initiative of 
industrial consumers rather than manufacturers. 

Not only British but American and continental in- 
struments are tested for conformity to specification, 
including accuracy and reliability. The scheme illus- 
trates a growing concern with quality and reliability, 
particularly of on-line process equipment, and also 
the growing cost and difficulty of choosing the right 
equipment for the job. Both the industrial buyer and 
domestic consumer are increasingly concerned with 
this problem of choice over a range of equipment 
much wider than industrial instruments. 

There is another quite separate scheme in the 
United Kingdom for the evaluation of new building 
components and materials. This is quite similar to 
the French scheme for the testing and approval of 
building components. Both schemes are concerned 
essentially with promoting progress in building and 
construction by using performance criteria for 
screening new developments. 

The French scheme was motivated by insurance 
requirements for new buildings; the British scheme 



was initiated by Government for the purpose of 
accelerating acceptance of new building techniques 
and reducing variety in favor of the better building 
techniques. Reciprocal approval arrangements are in 
mind. There is an element of compulsion in this 
scheme, as each certificate is deemed to indicate 
compliance with building regulations. 

There is a separate, well-established scheme for 
the performance testing and evaluation of agricul- 
tural machinery in the United Kingdom by the 
National Institute of Agricultural Engineering. 

These new schemes are part of a spectrum of ac- 
tivity that provide consumers, including industrial 
consumers, with quality assurance. Such schemes, 
unless well conceived, have their dangers and can 
introduce further barriers to trade. 

The national standards organizations are much 
concerned with quality assurance and have associat- 
ed national marks, such as the BSI Kitemark in the 
United Kingdom, the NF mark in France and the 
JIS mark in Japan. 

Generalizations about the economic role of these 
marks are liable to be wrong, as they have many 
purposes. When applied to some products such as 
crash helmets or life belts they are often rightly 
compulsory and restrictive, but when applied, for 
example, to metal finishes or the composition of al- 
loys they are permissive and informative and a valu- 
able help to the market. These well-known marks all 
indicate conformity with some national standard. 
The use of the mark is generally based upon 
approval of a manufacturer's - quality-control pro- 
cedures or on procedures agreed on by a whole 
association of manufacturers. For some products, 
samples have to be submitted to independent test. 

Conventions between nations for the reciprocal 
acceptance of the marks of their standards bodies 
are conceivable and have indeed been discussed but 
in general no conventions exist. There are, however, 
models to be followed, including the testing proce- 
dures already mentioned of CEE, and the Anglo- 
Dutch arrangements for the evaluation of instru- 
ments. 

An extension of these schemes concerned with 
quality assurance is certain. There seems to be no 
reason why evaluation techniques of the kind al- 
ready used for quite complicated industrial control 
equipment should not be extended to cover com- 
puters and ancillary equipment and communication 
equipment, including satellite equipment and even 
civil aircraft. 



49 



Such schemes could be extended internationally. 
The essential requirement is always an objective 
specification defining the tests to be performed, pref- 
erably agreed between manufacturer and customer. 
There is much to be said for the manufacturer 
having the right to veto the publication of a report if 
he wishes. This is in fact what we are generally do- 
ing. A satisfactory performance specification can 
hardly ever be written except at the end of an experi- 
mental program. 

Performance specifications for oil-hydraulic equip- 
ment, or bearings and lubricants, or electronic com- 
ponents, or almost all components or finished equip- 
ment of industrial importance can be written only at 
the end of an experimental program that may be ex- 
pensive. 

The production of sound performance standards 
depends indeed upon an intimate knowledge of what 
is possible as well as what is needed. Such knowl- 
edge is generally to be found only within the fron- 
tiers of the technologically advanced nations, and 
notably within the U.S.A. 

This is, therefore, a particular point where the 
world needs the leadership of advanced countries. 

Barriers to Communication 

All the barriers to trade that have so far been 
discussed in this paper, including performance 
standards, are concerned with end products of tech- 
nology and their suitability for use. Barriers to com- 
munication are probably of comparable economic 
importance, and the long history of standards is pri- 
marily concerned with problems of communication. 
No commercial transaction at a distance is possible 
without standardization of word meanings and units 
of quantity. These problems include the provision of 
basic and derived standards of measurement and 
their transfer, the language of units and indeed the 
language of science and technology, the new lan- 
guages of data processing and transmission, institu- 
tional structures and procedures used by such or- 
ganizations as ISO and IEC, and much else besides. 

The technology of the world advances by the diffu- 
sion of technology from discrete innovating centers. 
The rate of economic advance of all nations depends 
very much upon this rate of diffusion of new tech- 
nology. The smaller and developing nations are 
heavily dependent upon diffusion of this knowledge 
from outside their frontiers. International standard- 
ization makes a double contribution to this diffusion 
of knowledge. Standards are authoritative statements 



about technology, but standards are also concerned 
with processes of communication. 

The U.S.A. has played a very leading part and 
has a special responsibility to the ISO for nuclear 
energy standards. Various organizations may be said 
to be planning the diffusion of new knowledge about 
nuclear engineering to the future owners of nuclear 
power stations. 

Traceability 

The communication of standards of measurement 
can also be planned. Traceability is a word that was 
born in the U.S.A. in the 1950's. Standards of meas- 
urement are, of course, of no use unless they can be 
communicated. Many measurements inevitably lose 
accuracy in the course of communication. The art of 
communicating measurement standards is, therefore, 
itself a proper object of research, and in due course 
of the standards code defining the method of trans- 
ferring, say, a measurement of radio frequency 
power from a central national institution to the 
manufacturer's standards laboratory. 

The greater use of atomic definitions of units 
could reduce the problem of communication. 

In the United Kingdom we have followed with 
much interest the work of the National Conference of 
Standards Laboratories in the U.S.A. We are creating 
a British Calibration Service in the United Kingdom 
with a somewhat similar purpose but also with the 
ambition of giving meaning to the word "traceabil- 
ity." I hope that we may before too long have a 
series of standards as a foundation of traceable 
chains for many classes of measurement. 

Technology is demanding ever higher levels of ac- 
curacy for a wide range of measurements. This ac- 
curacy is required on the job in many parts of the 
world. The communication of a measurement to the 
point of use, or the diffusion outwards from central 
laboratories of measurement capability, is a large 
part of the problem and purpose of the British Cali- 
bration Service. The end of this development must 
be a much extended matrix of laboratories in the 
world as a whole, with measurements traceable to a 
few central laboratories and ultimately to the labora- 
tories of the BIPM. 

The concept of traceability as applied to measure- 
ment derives not so much from the location of ulti- 
mate standards as from a greater capability in a 
given location as a consequence, for example, of su- 
perior equipment. 

The application of the concept of traceability can 
therefore be extended notably to materials of high 



50 



purity or special composition. Traceable measure- 
ments are needed throughout industry, defense and 
commerce. The Common Market has given priority 
to the needs of commerce and there are now a 
number of draft Council Directives to the Common 
Market concerning weights and measures. 

International System of Units 

During recent years the world has gone far to- 
wards the adoption of an international system of 
units, or SI units. Perhaps the most important thing 
about units is to use them to help international trade 
and not to allow them to obstruct the adoption of 
international engineering and commodity standards. 
In the United Kingdom we know that we shall have 
to continue to live with both the SI and the English 
or Imperial system for a period. We are, however, 
adopting the metric units at points where it is be- 
lieved that they will help and not injure the econ- 
omy. This requires much study and consultation and 
the results are often surprising. 

The concept of a module, for example, is particu- 
larly important in the building and construction in- 
dustry. In the U.K. it has been decided to adopt a 
10-centimeter module. Thirty centimeters will also 
be a preferred dimension. No compulsory legislation 
converting the whole economy to the metric system 
is at present in mind, but rather the use of the met- 
ric system and SI units for increasing numbers of 
limited purposes, like its present use in the motion 
picture industry for film standards. Electric motors 
are a particular example of an early change. 

Units are just one contribution of standards to the 
art of communication. Of even greater importance 
in the future will be the standards for data process- 
ing and transmission. The ASA has made an out- 
standing contribution introducing American stand- 
ard FORTRAN. The U.S.A. holds the secretariats 
for IEC Technical Committee TC-53, Computers 
and Information Processing, and TC-53 (b), Digital 
Data Transmission, and is therefore in a unique po- 
sition to influence and accelerate production of 
world standards for data processing and transmis- 
sion. Work is needed urgently to control the prolif- 
eration of new words and acronyms. 

We may perhaps anticipate a great need for per- 
formance criteria for both computer equipment or 
hardware and for software, to give confidence and 
facilitate trade across national boundaries. Design 
standards are necessary for electrical connections, 
data format, and speed of transmission in terms of 
error rate and so on. 



The most serious problems, however, may con- 
cern the man-machine relationship. The develop- 
ment of software sophistication may eventually re- 
quire more direct man-machine communication, 
while details of the machine code and operating sys- 
tem will be looked after by the compiler and execu- 
tive and will be of no interest to the user. 

These developments may bring to the fore the 
great problems of national language differences, par- 
ticularly if the maximum international use is to be 
made of facilities. 

Information storage and retrieval will grow in im- 
portance with bigger storage banks in different coun- 
tries able to interchange information. Standard 
methods of indexing and recording will be essential. 
There is perhaps no bigger area of new problems. 
There should be much scope for close collaboration 
between the Ministry of Technology and Depart- 
ment of Commerce's new Center of Computer Sci- 
ence and Technology in data processing and trans- 
mission. 

ISO and IEC 

The central administrations of ISO and IEC are 
not commensurate with their great responsibility and 
they are to be strengthened, for this reason. The 
separation of ISO and IEC is perhaps also a weak- 
ness to be overcome in due course. The investment 
in these organizations by advanced nations will still, 
however, amount to no more than a small fraction 
of one penny, or one cent, per annum per head of 
our populations. Is the possible contribution of these 
organizations to reducing trade barriers really so 
marginal? Do all our other investments abroad in 
developed and developing countries really produce 
a higher return? 

The main staff work can, however, never be cen- 
tralized. The main contribution of individual nations 
may probably come through the secretariats, like 
TC-53. Much can be done by technical committee 
secretariats, by informal discussion and corre- 
spondence, to establish world consensus in advance 
of formal meetings. It is increasingly necessary for 
each secretariat to be supported by a specialized in- 
formation center, and these information services 
should be available to the central offices of ISO and 
IEC. Many programs will also require laboratory 
support. Indeed, the secretariats that we hold should 
influence the staffing of our organizations in re- 
search and development projects. All of us who 
hold technical committee secretariats have an exact- 



51 



ing task to win the confidence of other countries, 
both in our technical ability and our intentions. 

International Standardization Activities in 
Various Countries 

The Soviet Union and other countries of Eastern 
Europe do not hold many technical committee 
secretariats, but they do make a great contribution 
to international standards activity and are to be 
numbered among the countries whose confidence 
has to be won. 

The United Kingdom has frequently been in the 
lead in international standards activity. We believe it 
has been a good investment for us. In the United 
Kingdom, insularity is in decline. 

It is still a very difficult matter to decide upon the 
right balance between activities aimed at achieving 



national and international consensus. We appreciate 
that it is more difficult to decide upon the right bal- 
ance for a country as large as the U.S.A. How- 
ever, the world will lose much unless the variety of 
organizations concerned with removing technological 
barriers to world trade receive the full support of 
the U.S.A. 

There is a great spectrum of activity, over- 
simplified in this paper, needing international 
collaboration and your help. The United States of 
America Standards Institute and the National Bu- 
reau of Standards, supported by the finest standards 
laboratories in the world, will, we know, bring great 
benefit to the U.S.A.. and will, we hope, also make a 
contribution to world standards activity commensu- 
rate with the great contribution that the U.S.A. 
makes to world technology. 



3S8SSSSSSSSSS®; 



QUESTIONS FROM THE FLOOR 



Dr. Astin: Thank you very much, Mr. Wynn. Both 
Mr. McCune's and Mr. Wynn's papers are now open 
for discussion. 

Mr. Podolsky: My name is Leon Podolsky from the 
Sprague Electric Company in Massachusetts. I ad- 
dress myself to Mr. Wynn. He has asked a number 
of provocative questions. I am going to limit myself 
to just one — his remarks with regard to CEE mem- 
bership. 

He commented that in 17 years the United States 
has been only an observer to CEE. It is our under- 
standing that the charter and national legal basis 
for CEE has in all this time actually precluded mem- 
bership by the United States in the CEE and nothing 
more than observer status is available to us. Would 
you care to comment on that, sir? 
Mr. Wynn: I went into that myself and I got the 
answer that the USA was not precluded from joining; 
I would comment further that all constitutions can be 
changed. 

Mr. Podolsky: For 17 years we were welcomed as 
observers but not as members with a vote. 
Mr. Wynn: We will give the USA every support in 
trying to change the constitution accordingly. 



Dr. Astin: Are there further questions or comments? 

Question: How much progress has been made in 
standardization and communication of standards 
between Eastern Europe and Western Europe? 

Mr. Wynn: As far as we know, the countries of 
Eastern Europe are very quick to adopt ISO and IEC 
standards, but I believe there are people here from 
Eastern Europe who can reply better than I can. I 
think of all the countries in the world they respond 
extremely quickly in enforcing and adopting inter- 
national standards, once agreement has been reached, 
and they fully cooperate in the standards committees 
of ISO, IEC, and so on. 

Dr. Astin: Would you care, Mr. Sharpston, to com- 
ment further on that point? 

Mr. Sharpston: Yes, Mr. Chairman, I would con- 
firm the substance of that last remark. I have had 
this directly from the ISO staff and the members, 
that in their work they do very rapidly adopt the 
ISO recommendations where these are favorable, 
this being particularly true in their own regional 
grouping. 



ssssssssssssss; 



52 



Dr. Astin: We will now have our topic discussed by 
four experts on the subject of standardization. The 
first of these is Mr. Fayvel Hadass, who is the Direc- 
tor of the Standards Institution of Israel. 

Mr. Hadass: Dr. Astin, Ladies and Gentlemen: I am 
not supposed to take more than five minutes of your 
time. In five minutes or 300 seconds in the non-dec- 
imal system that are at my disposal, I wish to bring 
some fragmentary comments related to the aspect of 
developing countries. 

Looking back at the past 50 years, two events are 
most conspicuous; the immense technological ad- 
vancement so well described by Mr. McCune, and 
the awakening of a very considerable part of hu- 
manity to their economic potential. No doubt, both 
phenomena are interrelated. 

Looking ahead, we are facing two imminent 
world trade factors: One — Through further tech- 
nological advancement, the plenty of today may, 
under peaceful world conditions, turn into a disturb- 
ing surplus. This is not unlike the surplus brought 
about by industrial farming. Second — The awak- 
ened part of the globe can and is going to be turned 
into the potential recipient for this surplus. A first 
family car in Africa will be a better choice for the 
surplus automobile than the third family car in the 
producing country. 

It is therefore the concern of the highly advanced 
countries to promote the buying power of these po- 
tential markets. In order to become paying pur- 
chasers they must produce added values. Here, tech- 
nology can assist them in becoming a productive 
and constructive world trade factor. What I have in 
mind is applied technology, since sophisticated 
scientific technology is going to remain for a long 
time the domain of the most advanced nations. In 
young countries, sophisticated technology often re- 
sults in prestige ivory towers. A baby should be fed 
milk, not steaks! 

An important tool of technological advancement is 
no doubt standardization. It is of utmost importance 
particularly to developing countries as suppliers as 
well as purchasers in the world market. 

— -It helps them to establish, right from the begin- 
ning, an adequate quality of production. 

— It helps them to become discriminating buyers, 
thus intelligent spenders. 

— It offers them a kind of clearing house in the 
complex of world trade. 



— It also offers to the beginners the benefits of 
knowledge and experience accumulated in the exist- 
ing standards. 

Developing countries are particularly interested in 
international standards. They can and will develop 
their national standards, mostly those related to 
their specific natural, social and technical conditions. 
But in foreign trade, for all practical purposes, they 
are dependent mostly on standards of the buying 
and even selling advanced countries. The bitter taste 
of "colonial quality" is still fresh in the minds of 
Africa, Asia and Latin America. Naturally enough, 
they find international standards, based on world 
consensus, more just and reliable. The more so in 
the role of suppliers of raw materials and 
semi-finished products. 

It is in the interests, also, of the industrialized 
nations to help the developing part of the world be- 
come standard-minded and assist them in setting up 
standardization and testing facilities. 

From what I have been able to learn in the pilot- 
plant-sized economy of Israel, differing standards, 
the dualism of systems and the inadequate coverage 
of international standards are — always a nuisance, 
usually a waste of time, energy and money, often a 
serious trade barrier. I will illustrate with two exam- 
ples — 62% of the Israeli plywood production is be- 
ing exported. Our national standard provides for 47 
size varieties. Because of the lack of an internation- 
ally agreed-upon standard, we have to deliver many 
hundreds of sizes. — At the conference table of an 
international committee, the Indian iron ore export 
just increased its return by a^ full percent — , by 
millions of dollars. 

May I address a few words to my hosts? From 
observations collected around the globe, I sincerely 
conclude that the most advanced and standard- 
minded American technology is still detached, to a 
regrettable extent, from international standardization 
activities. I am convinced that you could give and 
take much more in international trade through 
closer cooperation in this area. If world trade is to 
be really free, smooth and decent, it is imperative to 
develop a global and uniform trade yardstick — to 
my mind, a meter-stick. 

Those who are qualified for leadership have to 
place the horse before the cart — and act early and 
decisively! 

When Lindbergh crossed the Atlantic, the rabbi 
admired his skill and courage, but failed to under- 
stand his hurry. Today, all of us are in a hurry — 
even the rabbi travels by plane. 



53 







FAYVEL HADASS is Director of the Standards Institution of Israel. His industri- 
al experience began in Danzig in the automotive industry. Upon his emigration to 
Israel in 1932 he spent seven years on the mechanization of farming. During 
World War II he spent four years on the development of the local industry for the 
War effort and served as Member of the A Hied War Supply Board. 

For the subsequent four years Mr. Hadass was active in international trade 
with an American firm. With the establishment of the State of Israel he became 
Controller of Light Industry and a Member of the Board of the Investment Centre, 
as well as adviser on industry to the Ministers. He founded, and for four years 
managed, the Institute for Vocational Safety. 

Mr. Hadass has been associated with Standards work for seven years and he is a 
Member of the Board of the Institute for Productivity. 



Dr. Astin: Our next discussant is Mr. Francis L. 
LaQue, who is Special Assistant to the President of 
the International Nickel Company of Canada, Limit- 
ed, and a Vice President of the International Nickel 
Company, Incorporated, assigned to executive sup- 
port of major corporate activities. 

A short time ago he headed a distinguished panel 
under the Commerce Department's Technical Advi- 
sory Board to study our national needs with respect 
to standards. His report is well known and has been 
widely read and discussed and I think was a major 
factor in the recent organization of the United States 
of America Standards Institute. It is my pleasure to 
present to you Dr. LaQue. 



Dr. LaQue: Thank you, Dr. Astin. Distinguished 
guests from abroad, ladies and gentlemen: I will take 
the risk of telling a story that might be considered 
to be funny to some people, and it has a moral. The 
story is this. 

There were a lady and her husband walking down 
the street. The lady noticed a weighing scale in a 
doorway. She went over, got weighed and came 
back with smiles all over her face. 

Her husband asked her, "My dear, how much 
overweight are you now?" 

She said, "I am not overweight at all. There is a 
chart in there on that scale, and according to that 
chart I am 6 inches too short." 

The moral is obvious, of course, that when rela- 
tionships are indicated between one measurement 
and another we cannot safely assume the interpreta- 
tion of this relationship is going to be the same by 
everyone who endeavors to make it, and I would 
think that the danger in this direction is likely to 
increase with the international use of any such sys- 
tems of relationships. 

I assume that the ground rules will permit me to 
deal, in my occupation as discussant, with matters 
that were presented this morning as well as this 
afternoon. I was particularly interested in trying to 
prepare a discussion in advance of what I thought 
Dr. McLuhan might say. That was an interesting 
activity, so in preparing my comments an immediate 



problem was presented in trying somehow to relate 
anything as "hot" as precise standards documents to 
the "cool" world which Dr. McLuhan visualizes as 
being imminent and perhaps desirable. The words 
"hot" and "cool" are used in this context in the 
sense that the speaker has tried to understand Dr. 
McLuhan. 

Precision and Uniformity in Standards 

In the field of international trade, in which stand- 
ards are an essential component of the language of 
communication, it is likely that everyone will agree 
that there must be maximum precision in describing 
by reference to an appropriate standard what the 
buyer expects to receive and what the seller agrees 
to furnish. There must also be precision in the de- 
scription of how compliance with stipulated require- 
ments is to be determined, so that the buyer can 
confirm that he got what he expected and so that the 
seller can be sure that what he furnished is likely to 
meet the tests that will be applied by the buyer. 

The ability to describe what is wanted and what is 
offered very precisely become more and more im- 
portant as the revolution in means of communica- 
tion progresses. It is already possible to transmit 
facsimiles of printed documents overseas in a matter 
of minutes. When such means of communication 
take the place of discussions at first hand, the 
need for precision in description of what is being 
dealt with becomes greater and greater. Along with 
this need for precision is an almost equal need for 
uniformity of standards on an international scale. 
Thus, advances in communication techniques in- 
crease the urgency of the development of interna- 
tional standards as a vital factor in world trade. 

The standards I have been discussing apply, of 
course, to things that are prescribed in terms that 
describe exactly what is to be furnished, keeping in 
mind the purpose for which it is to be used. These 
precisely descriptive standards or specifications must 
of necessity fall into what Dr. McLuhan would con- 
sider to be a "hot" category. 

Performance Criteria 

On the other hand, we can see a trend toward 
another type of standard or specification which pre- 
scribes what is wanted in terms of the performance 
needed or expected, without stipulating how this 
performance is to be achieved. This begins to ap- 
proach Dr. McLuhan's realm of the "cool", since it 
implies a degree of freedom — if not exactly free- 



55 







FRANCIS L. LaQUE is Special Assistant to the President of The International 
Nickel Company of Canada, Limited, and a Vice President of The International 
Nickel Company, Inc., assigned to executive support of major corporate activities. 
He previously served eight years as Manager of the Development and Research 
Division. He has been with International Nickel since 1927 and specialized in the 
field of corrosion and corrosion-resisting materials. Inco's well-known corrosion 
testing stations at Kure Beach and Harbor Island, North Carolina, were established 
under his leadership. 

A native of Ontario, Canada, Mr. LaQue received his Bachelor of Science De- 
gree in Chemical and Metallurgical Engineering from Queen's University, Kings- 
ton, Ontario in 1927, and an Honorary LL. D. from that University in 1964. 



wheeling — in which display of imagination and new 
approaches are favored in the "cool" atmosphere of 
cultivated vagueness, which the speaker guesses Dr. 
McLuhan would welcome and endorse. 

It seems reasonable to recommend that our atti- 
tude towards the nature of standards and specifica- 
tions should remain fluid, so that the advantages of 
any sensible approach can be examined and utilized 
on a rational basis, in what Dr. McLuhan might de- 
scribe as being a "cool" way to do it. We must, 
however, continue to use the "hot" line whenever it 
is impossible or impractical to employ the "cool" 
approach and when there are no reliable means 
either to define adequately the circumstances of the 
intended use or to measure performance capabilities 
closely enough to permit the use of a performance 
standard in preference to a descriptive one. 

The tremendous capability of the National Bu- 
reau of Standards, as represented by its staff and its 
new facilities on display on this occasion, is being 
applied more and more to the development of new 
and better means of measuring performance as well 
as properties of materials and things that enter 
world trade. This is bound to accelerate greater use 
of performance as compared with descriptive stand- 
ards and specifications, and thus we shall feel more 
and more at home with our standards in the new 
and "cooler" world in which we are going to be 
living. 

T have some additional comments pertinent to 
some of the questions raised this morning and com- 
ments made. 

Technology flows in world trade through the sub- 
stance of engineering and material standards and 
methods of test, which include the distilled product 
of the tremendous amount of research upon which 
these standards are based. This will be a means by 
which the developing nations can be given the ad- 
vantage of the technology of the nations in which 
the most sophisticated standards originate and ap- 
pear in their most highly developed form, most use- 
ful to developing nations — that is, international 
standards. This requires, of course, the existence or 



cultivation of an ability to make use of knowledge 
provided in this form to the developing nations. 

Systems of Measurement 

I have another comment dealing with occasional 
presentation of statistics relating world trade to sys- 
tems of measurement. Statistics on possible effects 
of systems of physical measurement on international 
trade ought to be refined, to make a proper distinc- 
tion between items where the size module or system 
of measurement is likely to be important — for exam- 
ple, a component of manufactured goods as distinct 
from a complete assembly such as an automobile or 
a machine, and as distinct from those where no 
significant effect is likely such as foods, fuels, and 
raw materials. 

It is easy to understand that the problems pre- 
sented by a change in the system of measurement 
will be least in the case of measurements of weight 
and volume and greatest in the case of linear meas- 
urements as applied to machine components, and 
here the problem is not so much one of the units 
used for measurement as it is the size that is meas- 
ured. We speak of international cooperation in 
achieving uniformity in the realm of measurement 
and I would hope that we could look forward to a 
lot of give and take, in which the module sizes al- 
ready well established with the one system might be 
accepted in other areas in return for the acceptance 
of the unit of measurement on an internatioal scale. 

I recall that in Mr. Wynn's paper he referred to 
the desirability of bringing to bear on safety stand- 
ards the accumulated knowledge, wisdom and expe- 
rience of every country, rather than to develop such 
standards on an individual country basis. I think this 
is merely an extension of what I believe is the most 
important factor in the development of safety stand- 
ards in any country, which is not to waste time de- 
bating where the dominance of development of such 
standards should rest, but to try somehow to find the 
best way to organize competence from every availa- 
ble source. 



57 



Dr. Astin: Our next discussant is Mr. Samuel H. 
Watson, who is Manager of Corporate Standardizing 
of the Radio Corporation of America. 



Mr. Watson: Dr. Astin, distinguished guests, both 
from our many friendly countries abroad and the 
United States: 

Standardization is recognized and firmly estab- 
lished as an essential function in government, in the 
military and in industry. My identification is predom- 
inantly with industry, where the pursuit of standard- 
ization can be difficult, costly, and limited in effec- 
tiveness unless it is a team effort which includes 
Government and the Department of Defense. The 
areas of mutual interest are extensive. Teamwork is 
in effect in many committees at the national level and 
because it is, more and more standards are appearing 
with a stamp of universal approval and acceptance. 
They are the product of hard-working, objective, and 
highly dedicated people; they are truly United States 
of America standards. They clearly identify United 
States of America positions on the subjects resolved, 
and they equip U.S.A. delegations well with the 
documentation and the authority needed for effective 
participation in international standardization. 

Coordination of Standards 

Thoroughly coordinated standards are needed in 
greatly increased numbers. To this end, the function 
of the reconstituted American Standards Association 
under the new and appropriate name, United States 
of America Standards Institute — if its function can 
be briefly stated — is: "to provide the coordination, 
the procedures, the administration and the central- 
ized services needed to accelerate the production 
and maintenance of United States of America stand- 
ards and to establish and maintain appropriate USA 
participation and effectiveness in world standard- 
ization." The capacity of the Institute to carry on 
this important task will be markedly increased with 
the granting of the proposed Federal charter. 

Standards as Aids to Communication 

The standards in greatest need internationally are 
those that can make a contribution to improved 



communications, a contribution in each case that is 
worth the effort and expense required to bring it 
about. 

One of our great international standards, a boon 
to communications and world trade, is the Gregori- 
an calendar. Occasionally a proposal to change it is 
publicized. Perhaps the change is convincingly ex- 
plained as one offering some improvement in com- 
munications. However ; since the existing calendar 
is working so well and since it took almost 400 years 
to get it into universal use, it is not likely to change in 
the near future. 

In any avenue of international communications, 
where all those involved readily understand one 
another, further purification of the basic standards of 
communication is not likely to affect world trade to 
any measurable degree. Conversely, changes in exist- 
ing standards or newly introduced standards which 
can substantially speed-up and sharpen understand- 
ing among the representatives of different countries 
can have far-reaching effects upon world trade. 

Such standards are a most favorable influence to- 
ward improved utilization of world manpower and 
material resources. Standards in this latter category 
are the breakthroughs, the difficult standards to 
come by. Included would be any standard, practice, 
or procedure that softened the greatest obstacle in 
the conduct of international transactions — the lan- 
guage barrier. 

Perhaps the near future will bring an ingenious 
way of accelerating the already somewhat advanced 
merging of languages. Probably few of us in the 
English-speaking countries realize how much French 
we know until we thumb through an English-French 
dictionary. In the same vein, if others share my 
experiences, it is disturbing when using an English 
dictionary to note how much English we do not 
know. 

I stated that standards that improve communica- 
tions are most important. Through them, the peoples 
of every nation will better understand and better 
evaluate the standards and offerings of other coun- 
tries; each in terms of its own economic needs and 
preferences. As a result, it is likely that a degree 
of variety and not global sameness will continue to 
prevail. 

The trends in color television preferences in the 
countries of Europe today provide an excellent ex- 
ample. Color television receivers will be powered by 
a variety of voltages and frequencies, the pictures 
will contain a varying number of lines per frame, 



58 




SAMUEL H. WATSON is Manager of Corporate Standardizing, Product Engi- 
neering, of the Radio Corporation of America, an activity with which he has been 
intimately concerned since 1944. Beginning his engineering career with General 
Electric Company, Mr. Watson joined RCA in 1929, engaging first in design and 
field engineering. During the war, he served as Project Engineer on vital military 
communications equipment, including radar. 

Mr. Watson, is a Senior Member of the Institute of Electrical and Electronic 
Engineers, and charter member and Fellow of the Standards Engineers Society. In 
recognition of his service to the voluntary standards movement through leadership 
in the actual development of standards, that organization awarded Mr. Watson its 
ASA Standards Medal in 1962. 

Mr. Watson was the U.S. Representative to the ISO Committee on Drawings in 
Geneva, Switzerland, that year, and was Chairman of the U.S. Delegation to the 
meeting in Budapest, Hungary, in 1965. 



256-707 0-67— 5 



and the broadcast signal standards will conform to 
one of possibly three different systems. 

Importantly, however, the basic standards of 
measurement are essentially identical. This enables 
all the countries of Europe, regardless of power, 
broadcasting, and receiving practices to use the same 
standard materials and components in the manufac- 
ture of television equipment. 

Although the European color television receiver 
owner may not have access to certain programs, he 
can fully enjoy, in the programs he does receive, the 
reliability and fitness-for-purpose developed in the 
United States over a number of years of high vol- 
ume color TV component production and field ex- 
perience. 

Critical Approach to Standardization 

I stated that standardization is recognized and 
firmly established. This means that it is here to stay, 
and more and more will be expected of it in govern- 
ment, in the military and in industry. Funds and 
management support for standardization are being 
made increasingly available. With them will come 
demands for high performance levels; the maxi- 
mum of effective standardization for each dollar ex- 
pended. The standards engineer of the future, like 
many today, must be a very competent fellow with 
his feet firmly on the ground, a healthy and con- 
trolled enthusiasm for standardization and a ca- 
pacity for effectiveness with people as well as with 
technical problems and situations. The standardizer 
who waves the banner and gets carried away will 
require increased restraint. 

In recent months, in my reading, a new stumbling 
block has been added; the word "Hertz." I refer 



to the adoption of Hertz for use instead of CPS 
(cycles per second) and not to the well known 
automobile rental agency. In the current issue of 
Electronic Products, November 1966, Mel Mandel, 
Editorial Director, writes under this heading: "Read- 
ers favor CPS over Hertz two to one." The editorial 
is interesting in its one page entirety, and I quote 
this segment: 

"When so many company presidents, vice presi- 
dents for engineering, general managers, chief en- 
gineers (and two physicists with the National Bureau 
of Standards) vote (three to one) against Hertz, it 
is obvious that our representatives to the Internation- 
al Electrotechnical Commission, where Hertz was se- 
lected, did not properly understand the people they 
represent. Should we use a little more democracy in 
selecting our international technical negotiators?" 

It is not my purpose in this reference to imply a 
personal position but rather to re-emphasize that 
management is becoming more and more critical of 
the standardization function and of the standardizers. 
The consensus principle is going to require more 
surveillance. The consensus in the future must be 
consistently real and contain an "engineered compo- 
nent" of smaller size. 

I consider it an exceptional honor to have been 
invited here today to participate in these historic 
dedication ceremonies and to mingle with so many 
fine people from so many great countries. As they 
have in the past, these great laboratories in their 
new, enlarged, and modernized setting are destined 
to continue as a tower of increasing strength in 
support of our United States of America standards 
program, nationally and internationally. 




60 



Dr. Astin: Our final speaker is Mr. C. H. Sharpston, 
who is the Secretary-General of the International 
Organization for Standardization (ISO). 



Mr. Sharpston: Thank you, Dr. Astin. I wish to 
touch rapidly on three matters in the time at my 
disposal. The first is the general way in which the 
work of ISO is carried out; secondly, some Govern- 
ment legislation; thirdly, the interaction of standardi- 
zation work at three levels — national, multinational 
regional group, worldwide. 

International Organization for Standardization 

The impact of ISO and IEC activities on world 
trade is greater than would be indicated by a recital 
of the nearly 1,000 Recommendations which have 
been published and almost as many Draft Recom- 
mendations now in the pipeline. This is a conse- 
quence of the way in which the work is organized. 

In choosing its delegation to participate in our 
Technical Committees and Subcommittees, each na- 
tional standards institute calls on experts from pri- 
vate industry, (as consumers as well as manufactur- 
ers), by virtue of the relationship which links the 
Institute to industrial companies and manufacturers' 
associations. It can and does include, when appro- 
priate, representatives of research laboratories, Gov- 
ernment Departments, consumers' associations, and 
so forth. The composition of a national delegation 
is altered where necessary from meeting to meeting, 
in the light of the agenda. 

In the give-and-take of international negotiation 
within the Technical Committees, delegates obtain 
first-hand experience of the way world trade can be 
hampered by the absence of international standards, 
and likewise of the difficulties in achieving such 
standards. They carry this experience back into their 
normal professional work as well as contributing 
their practical wisdom to the international recom- 
mendations for standardization. 

In the last analysis, the scale of our activities in 
ISO and IEC, and our effectiveness, depends upon 
the national Member Bodies. It was they who con- 



stituted our organizations originally, it is they who 
finance our work, and exercise control of policy. 

My colleague, Louis Ruppert, the General Secre- 
tary of IEC, is here with us, and he can speak more 
particularly about his organization. As far as ISO 
is concerned, national Member Bodies fully agree 
with Mr. Wynn that we have not grown recently as 
fast as our responsibilities. They have recognized 
this in the most practical fashion, by voting funds 
for 1967 which are more than double those of 1966. 

A greatly strengthened staff will not only enable 
us to process more Recommendations, doubling and 
then redoubling the output of recent years within 
24 months; it will also make possible a more skillful 
coordination of the work of our many Technical 
Committees and a more sensitive planning of our 
forward program to match the needs of world trade. 

Some 20 years of experience bear witness to the 
fundamental soundness of our organizational struc- 
ture, to its flexibility and its adaptability. If 
Mr. McCune is right, we might have to be 10 times 
as active by the early 1970's as we are today, I don't 
know. What I do know is that, provided industry 
and governments agree and make the resources 
available, ISO will measure up to that challenge. 

Incidentally, Mr. Wynn mentioned that the Soviet 
Union and other countries of Eastern Europe do not 
hold the secretariats of many of our Technical Com- 
mittees. That is true, but whatever the historical 
reasons for this state of affairs, it does not represent 
today a lack of confidence in the value of ISO's 
work. It is no secret in fact, that these countries 
desire to take on more such secretariats as the 
opportunities present themselves. 

There is a solid foundation of international rec- 
ommendations in the basic fields of terminology, 
units, symbols, methods of measurement, documenta- 
tion, classification, etc. This work is continuing. In 
the field of applied standards, the record is admittedly 
more patchy. It does, however, include many Rec- 
ommendations relating to physical, mechanical and 
chemical methods of test; methods of sampling and 
quality control; safety standards; product quality and 
"fitness for purpose." My list is not exhaustive. 

As one of the means whereby technology is 
diffused from industrially advanced countries to de- 
veloping countries, the work of our Technical Com- 
mittees and the resultant ISO Recommendations play 
an important role. The developing countries par- 
ticipate in this work to the extent of their capabilities 
— and as consumers where they may not be produc- 
ers. We also have begun to hold seminars and con- 



61 




C. H. SHARPSTON is Secretary General of the International Organization for 
Standardization (ISO). During the war, he served as Assistant Director of Plan- 
ning, Programmes and Statistics in the Ministry of Aircraft Production, and was 
subsequently concerned with matters relating to the economic recovery of post-war 
Europe. 

Mr. Sharpston's industrial experience was with the English Electric Company 
and more recently with a member company of the Joseph Lucas group. His work 
has encompassed market research, sales forecasting, export projects and budgeting. 
He has dealt extensively with overseas negotiations relating particularly to the 
European Economic Community. He has spent the past few years as Director and 
General Manager of two subsidiary companies of Joseph Lucas (Industries) Ltd. 
in Brazil. 

Mr. Sharpston received his education at St. Paul's School, London, and at Cor- 
pus Christi College, Cambridge, where he obtained a first in mathematics and 
economics. 






ferences to guide the newly developing countries in 
standardization matters. 

Government Legislation 

Next I want to take compulsory standards, where 
safety, health, and public amenity are involved. At 
the national level, government departments will gen- 
erally draw heavily on outside advice about the 
technical content of legislation in this field. Add the 
extra dimension of a world community of trading 
nations and you need to think a bit more carefully — 
how to organize the preparation of such legislation, 
in order to achieve an organic international whole. 
The commonest approach is to move on from 
established national legislation to inter-Govern- 
mental negotiation aimed at reconciling the national 
differences. 

The greater the technical content of such legis- 
lation, the more I would question the efficiency 
of this procedure. It seems to me that an alternative 
approach should be adopted more frequently. This 
is, to begin by ironing out the national differences in 
the purely technical aspects, within the non-Govern- 
mental forum of ISO and IEC. The component of 
expertise in public administration can be introduced 
at this stage quite effectively by having government 
officials as advisers to or members of national dele- 
gations in our Technical Committees. 

When the draft Recommendation emerges from a 
Technical Committee, we have a period for the fullest 
consultation of all interested parties, prior to sub- 
mitting it to our Council for approval. In the class 
of standards which I am discussing, governments as 
such would be the most interested parties. By the 
time ISO published a Recommendation, Govern- 
ments could nearly be ready with draft legislation to 
submit to individual legislatures. I am aware that 
this kind of legislation is by no means non-political 
and non-controversial. That is the case however, 
whichever approach is adopted. I wonder how many 
of you agree with my ideas. 

Coordination of Standardization at 
Various Levels 

Thirdly, there is the issue of standardization at 



national, regional, and international levels, and the 
best way to coordinate them. There can often be a 
basic dilemma. The smaller regional groups are more 
cohesive, and likely to be more active and work 
more quickly than a worldwide organization. On 
the other hand, fully international standards benefit 
these groups most in the long run, and a set of dis- 
cordant regional standards may actually make it 
harder to agree subsequently on an international 
standard. 

In parallel with the work in Western Europe de- 
scribed by Mr. Wynn, the harmonization of stand- 
ards in Eastern Europe is undertaken within 
COMECON and in the Americas by COP ANT— 
the Commision Panamericana de Normas Tecnicas. 
There is no simple solution, for we must recog- 
nize that the pressures for action at the regional 
level are often stronger than at the international 
level. In most cases at the regional and the inter- 
national level, we are seeking to iron out differences 
between national standards which already exist. I 
can only suggest a complete flow of information 
from the various regional groups to ISO. If we see 
that the work is moving towards a consensus in 
a given sector, well and good; if it seems to be 
moving on a collision course, we could discreetly 
drop some words in the appropriate ears. 

The great challenge, however, lies in the newer 
technologies and the new developments within older 
technologies — the challenge, to write truly interna- 
tional standards from the start; instead of several 
national standards. I would contend that the best 
hope of success in these cases is to go clear-sightedly 
and with firm purpose for negotiation at the inter- 
national level only. 

Dr. Astin: Thank you very much, Mr. Sharpston. 
I am sure that there are a lot of questions remaining 
but I will have to ask you to refer your questions 
to these gentlemen at the reception this evening. 
I would like to thank all of you for participating, 
and most particularly to thank the speakers for their 
most interesting contributions. 



63 



Banquet Program 

Chairman: Mr. John T. Connor, Secretary of Commerce 




Secretary Connor: In this nation, beginning around 1950, a few people outside of 
those directly engaged in the work began to realize the significance and the impli- 
cation of the progress being made in the field of science and technology. At about 
the same time, a few others began to realize the great importance of international 
trade, and began to talk about the importance of growth in international trade, and 
the absolute necessity for broadening the area of free trade on a fair and reciprocal 
basis. 

Still fewer people in this country combined those interests and those under- 
standings and articulated them in the context of the subject of this symposium: the 
effects of technology on international trade. One such individual — and an excep- 
tional one — is here with us this evening. He is Vice President of the United States. 
May I present him to you now: The Vice President. 

65 




HUBERT HORATIO HUMPHREY, Democrat, of Waverly, Minnesota, was born 
in Wallace, South Dakota, on May 27, 1911. Mr. Humphrey received a degree 
from the Denver College of Pharmacy in 1933, his B.A. degree from the University 
of Minnesota in 1939, and his M.A. from Louisiana State University in 1940. 

He was elected Mayor of Minneapolis in 1945 and 1947. In 1948 he was 
elected to the U. S. Senate and re-elected in 1954 and 1960. His Democratic 
colleagues in the U. S. Senate selected him as the Assistant Majority Leader in 
1961 . In 1964 he was elected Vice President for the term beginning January 20, 
1965. 

He is President of the U. S. Senate, a member of the Cabinet and National 
Security Council, Chairman of the National Aeronautics and Space Council, Chair- 
man of the Peace Corps Advisory Council, Chairman, National Council on Marine 
Resources and Engineering Development, Honorary Chairman of the National 
Advisory Council to the Office of Economic Opportunity, Chairman of the Special 
Cabinet Task Force on Travel USA, member of the Board of Regents of the 
Smithsonian Institution, and Chairman of the Cabinet Task Force on Youth Oppor- 
tunity. At the request of the President, the Vice President has helped coordinate 
and implement the Federal government's responsibilities in the areas of civil rights 
and poverty. 



Speaker: The Vice President of The United States, Honorable Hubert H. Humphrey 
Address: Technology and Human Betterment 

Vice-President Humphrey: Thank you, Mr. Secretary, you have an imposing list of 
participants in this conference. By the time it is done, I am sure that just about 
every conceivable aspect of technology and trade . . . technology and competition 
. . . technology and investment . . . technology and growth will have been examined 
and discussed. 

I am also aware that the so-called "technological gap" between the United 
States and other nations — particularly our Western European friends — can hardly 
be escaped these days. Each day there seems to be a new proposal — and some of 
them have been good ones — toward closing that gap. If there is a technological 
gap, there is no gap in the information about it. Therefore, rather than enter into 
any technical discussion this evening, I would simply like to leave behind a few 
general observations and ideas. 

First, although some people deny it, I do not dispute the fact of a tech- 
nological gap. I know that all the statistics indicate that we in the United States 
have commanding leads over Western European nations in many fields — especially 
in computer technology and utilization. 

But we have advanced technology in large part simply because our industry, 
which exists in many cases on a far larger scale than European industry, has had 
the need for it. Supply does follow demand. 

Proposals for Closing Gaps 

I think by far the most promising proposals for closing the American-Euro- 
pean technological gap have been those such as Prime Minister Wilson's on Mon- 
day for a European Technological Community. "If Europe — which has already seen 
the benefits of a European Economic Community, a Coal and Steel Community, 
and an Atomic Energy Community — were to pool her technology in a similar way, 
I have no doubt that the gap would already be a long way toward being closed. 

The very fact of entry into the European Communities by Britain and her 
EFTA partners — and eventually perhaps by others — would help create an even 
larger European market and larger industry able to finance and sustain advanced 
technology, along with the necessary research and development. And from the 
general need for such technology, I feel sure it would follow. 

The Rich-Poor Nation Gap 

This leads me to my second observation: Namely, that economic integration 
and the creation of larger, continental markets — all over the world — can be a 
powerful force for closing any technology gaps. 

It seems obvious, but too often overlooked, that small and poor nations stand 
little chance for economic sustenance if they do not seek economic integration — or 
at least, close economic cooperation — with their neighbors. This is beginning to 
happen in Latin America, Asia and Africa, but not nearly rapidly enough. 

I am pleased to see that "Technology and the Developing Countries" will be 
one of your subjects tomorrow. 

Long after any North Atlantic technology gap is closed, it will be the business 
of the Atlantic nations to try to close the far more dangerous rich-poor nation gap. 
We in the rich nations must begin taking more active steps now to help the poorer 
nations build their economies, create broader markets, and develop their own tech- 
nologies. 

67 



I do not mean that each developing nation, and its economic partners, will 
need the capacity to produce and market sophisticated IBM systems. I do mean 
that, without trained manpower and the ability to enter the technological age, the 
developing nations will not only be unable to compete in world markets but that 
the resulting political and social unrest in these nations will be a threat both to 
their own security and ours. 

The Proper Ways to Use Technology 

And this leads me to my third general observation: That we all ought to do a 
little more thinking about what technology is for. If technology is used just to 
construct more impressive pieces of hardware — without resulting human benefit — 
then it will be wasted. 

I believe that today we have the technological capacity already at hand: To 
rebuild the decaying central cores of large cities all over the world; to provide 
decent and reasonable housing on a wide scale; to lift primitive agriculture into the 
modern day; to compress the time scale for nations with catching up to do; to 
master our physical environment before it masters us; to end the coexistence of 
starvation and abundance on the same planet. 

In my view, the real "technological gap" is between our technological capac- 
ity and our application of it to social needs. These needs — such as education, 
public health, recreation and transportation — exist in every part of the world. 
Meeting these group needs, however, is quite different from meeting individual 
needs such as for automobiles, clothing, or electrical appliances. 

Old ways of doing things simply won't do the job. We need new mechanisms, 
new ways and means for bringing technology into the market place of public 
needs. 

Constructive New Partnerships 

Here in our country the model may lie in the constructive partnership of 
government, industry, labor, and the university that has been so successful in our 
space program. The talent and resources of all these elements in American society 
brought to bear in an efficient and coordinated fashion, have moved us forward in 
space far more rapidly than we would have hoped even a few years ago. 

We have seen, too, what government research and development contracts — 
given to the university and to private corporations — have produced in overcoming 
scientific and technological obstacles in a remarkably short time. 

The same partnership concept ... the same "systems approach" . . . the same 
investment in research and development, applied to other public needs, may prove 
to be the way in which our rich nation may finally be able to overcome economic 
and social problems which have been generations in the making. 

I believe, too, that private industry, acting on its own, can be a powerful force 
in overcoming these problems. In the United States, a good deal of our tech- 
nological capacity lies in private industry. In other countries, this situation often 
differs. 

I know from personal experience that American business today is demon- 
strating a social conscience. This has been shown again and again in such areas as 
equal employment opportunity, retraining of workers, and hiring the handicapped. 
Often as not, public service has also turned out to be profitable. I think that 
American private industry — operating in a competitive environment which pro- 
motes efficiency — can profitably enter other areas of public need, providing educa- 
tional services, slum rehabilitation, and such things as information systems. 

68 



Where these things may not be profitable, I believe we in government should 
do what we can to be of help until they become so. (But I have the feeling many 
of these things can be profitable from the start.) 

Today we are putting to use in government many of the modern management 
techniques already used in American industry. In formulating federal programs 
and in organizing ourselves — such as in the new Department of Housing and Ur- 
ban Development, and of Transportation — we are increasingly concerned today 
with attacking our national problems with the highest degree of coordination and 
cost-effectiveness. We have for example, with the creation of the new Department, 
begun to consider transportation as the problem of how to move men and materi- 
als most effectively, rather than the particular problems of railways, airlines and 
highways. 

The new Demonstration Cities Act, passed in the last Congress, is our first 
legislation which attempts to pull together all programs for the city — programs for 
economic opportunity, for housing, for clean air and water, for social welfare, for 
highway construction, for neighborhood renewal, and so on — and bring them to 
bear together in the right mix, in the right place, at the right time to best improve 
the urban environment. Up until now these programs have too often been adminis- 
tered without regard to their relation to each other, or to their order of priority. 

And both the partnership concept and systems approach have been put to 
work in the war on poverty — part of which is managed under contract by private 
American corporations. In California my friend Governor Pat Brown — working 
with aerospace companies — has made a promising beginning at the state level in 
applying these approaches to problems of transportation, garbage disposal, crime, 
and paperwork. 

We are just beginning to utilize our technological capacity for human benefit 
here in the United States. We are learning. But, during the learning process, we 
still — as the world's most technologically advanced society — have a responsibility 
to help create human benefits in other places by making our knowledge more 
widely shared. 

How to Transfer Technology 

Technology moves in the form of products and services that nations ex- 
change. It moves through patent royalties and licensing arrangements. It also 
moves in textbooks. 

I have noticed that while a breakthrough in science flashes quickly around the 
world, a breakthrough in technology may take years to find its way to a place of 
need. What we should seek, therefore, are rules and practices to help speed the 
flow of technology, not slow it down or stop it. 

I know the argument that technology carefully gained should not be easily 
shared, lest hard-earned competitive advantage be lost. The argument against shar- 
ing of technology, it seems to me, is not unlike the argument against liberalized 
trade. But in technology, as in trade, the benefits of openness and free exchange 
would seem to outweigh any loss of temporary, protective advantage. 

I should think that an international patent system, for instance, would go a 
long way toward safeguarding ownership of valuable technological processes with- 
out burying each nation under paper. 

And it seems clear to me that the United States' own long-term economic 
interest dictates that our trading partners should develop strong, tech- 
nologically based competitive economies. 

69 



Stemming the Brain Drain 

Technology also moves in the minds of people who travel from one country 
to another. Some travel to teach, and some travel to learn. 

When students have been trained in another country and then remain there to 
fashion their careers, we are faced with one element of what is the now-famous 
"brain drain." 

There are thousands of young scientists and engineers working in the United 
States who came here to learn, but have stayed to earn. 

If it is any comfort to those nations which have lost the services of their 
talented citizens, they should know that we have experienced a comparable situa- 
tion in the United States. Some of our states and regions graduate more Ph.D.s 
each year than they employ. There is a "brain drain" from our Midwest to our 
East and West Coasts. We deplore this. But from a broad, national point of view, 
we can at least take some comfort from the fact that the United States as a whole 
is richer for this new talent. 

There is no comfort at all for the developing country desperate for trained 
manpower when that manpower is swallowed up here. These are precious human 
resources they cannot afford to lose. 

How do we reverse this flow? 

First of all, I take it for granted that good, technically trained people do not 
turn away from their homelands for money alone, or for better living conditions 
alone. Any good man wants to be where the problems are and where he has a fair 
chance of solving them. He also wants to utilize the most modern equipment and 
facilities. 

There are some things we can do. I believe a great part of the problem lies in 
the educational systems of the industrialized countries. Too often, we offer disci- 
pline-oriented — rather than problem-oriented — education and training. Quite prop- 
erly we emphasize the "ics" — physics, optics, nucleonics. I believe we must empha- 
size, too, the "tions" — education, transportation, nutrition, communication, 
irrigation — the things needed in developing countries — so that both our own citi- 
zens and those of developing nations can acquire the useful skills of nation-build- 
ing. 

I think, too, that we can help draw these valuable people homeward by mak- 
ing available to their own nations equipment and facilities that they have become 
accustomed to here. Our government agencies, our universities, and private in- 
dustry are all topheavy with equipment which is perfectly satisfactory for skilled 
use, but which has been superseded by the next-generation model. As chairman of 
the Aeronautics and Space Council, I have made it my particular business, for 
instance, to see that equipment which has served its purpose in our advance 
research and application in space has been put to good use elsewhere. 

We can help by working with the developing countries to insure that too high 
a percentage of their students do not come to the United States to acquire skills 
which have no relation to the priorities at home. We can also, quite practically, do 
what we can to help establish institutions in their home countries which will give 
these young people the skills they need without leaving home in the first place. 

Flexible Approaches 

There is the across-the-board need to help build the technologies of the have- 
not nations so that their talented people will have sufficient daily challenge. It is 
clear that unemployed or underemployed scientists, even if they do not leave their 
country, pose political and social problems. In all we do to raise technological 

70 






capabilities around the world, and to use those capabilities for human benefit, I am 
convinced that we should not become bound by doctrine, dogma, or ideology. 

In the United States there were any number of people who argued that there 
was no way to undertake a major effort in space except under complete govern- 
ment auspices. Yet, as I have related, we have been successful with another ap- 
proach. I am equally sure that the approach we took would be a dismal failure in 
many other countries, because of the varying strengths and relationships in their 
societies. 

Opportunities for Business 

We need to find out what works, and use it. I can think of a number of 
opportunities, not tried or barely tried. 

For the business executives here tonight: I believe private corporations should 
think about establishment, with other corporations — regardless of their nationality 
— of joint training institutes in talent-short parts of the world. 

I don't mean that you should establish your own private foreign aid programs 
(although I'd be in favor of that too). What I see are cooperative arrangements 
which meet the intellectual needs of the people being trained . . . which help meet 
the national goals of the country in which the institute is located . . . and the 
legitimate financial objectives of the private or public enterprise company which 
sponsors it. 

Opportunities for Universities 

To those of you from universities: I would like to see schools established by 
you, on your own initiative, devoted to city-building, to agricultural development, 
to modern management. Why can't we export the essence of the Harvard or Stan- 
ford Business Schools? 

I believe that American and European universities — increasingly breaking out 
of isolation from their own societies — should try to meet as well the human needs 
of the people living in the forgotten two-thirds of the world. 

Opportunities for Foundations 

To those of you from private organizations and foundations: What opportuni- 
ties do you see? Here in the United States we have a National Academy of Engi- 
neering. It took us a long while to get it, but now we have it. 

I see no reason why the Academy could not serve as a clearinghouse in 
helping to set up similar engineering institutions in other countries, working on 
public problems. 

Opportunities for Government 

To those of us in government: I think each of us, in our respective govern- 
ments, must seek new ways to use technology constructively. 

The United States government, in this past year, has embarked on new inter- 
national programs using technology in the fields of health, of education, and of 
agriculture. We mean to expand those programs. We have taken steps to remove 
barriers to the flow of scientific and technical information and instruments to and 
from our country. We have increased our programs of international exchange. But 
I have no doubt that we must do much more, as other governments must do much 
more. 

I believe that we should be particularly receptive to proposals from other 
governments, from international organizations, from private companies or groups 
of companies, from any source, in fact, which wants to put technology to wider and 
better international use. 

71 



The least we can do is to reward initiative by others, and to remove unneces- 
sary obstacles, when a good idea turns up. (And if the Americans in the audience 
have any doubt about where to submit their good ideas, I would refer them to Vice 
President Humphrey.) 

The Need for Action 

Finally, may I make this observation: We can perceive today the general need 
for . . . and the genuine benefit from the building of technological strength in every 
country of the world. 

We can also begin to perceive the ways in which this can be done — a number 
of them have been discussed at this conference. What remains to be done is for all 
of us to act on our knowledge. 

As Thomas Huxley once said: "The great end of life is not knowledge, but 
action." It seems to me an abysmal waste of time, of resources, and of energy 
whenever men build barriers between themselves or when they miss the opportuni- 
ty to improve mankind's general lot on earth. 

Today we have the chance — through technology — to remove those barriers, 
and to lift all our nations together by our action. / think we should get on with it! 




72 



November 17, 1966 



Morning Session — The Impact of the Policies of Government on the Creation and 

Use of Technology for Economic Growth 



Mr. Stern: This morning's session will deal with the 
instruments of government and how they may be 
used to encourage the creation and the utilization of 
technology. As co-chairman of the session and first 
to speak on the subject, we have with us the Presi- 
dent's Special Assistant for Science and Technology, 
Dr. Donald F. Hornig. 



Dr. Hornig: Ladies and gentlemen: It seems to 
me this symposium is unique in recent times in that 
it has brought together such a wide spectrum of peo- 
ple of different persuasions to discuss these topics. 

The title of this morning's session is "The Impact 
of the Policies of Government on the Creation and 
Use of Technology for Economic Growth." I hope 
that our policies are more concise than that title. 
Government policies have at times been widely mis- 
represented, and discussed from many points of 
view. It seems to me that it is important that we get 
together for this kind of discussion. 

We have with us this morning a distinguished 
group of panelists and discussants; businessmen, 
technologists and scientists. They are all a part of 
this problem, which I do not think is well under- 
stood. Nor do I think we have yet found, in our own 
government at least, all the proper mechanisms for 
taking into account technology as part of economic 
growth. 1 hope that many aspects of this problem 
will be aired and discussed this morning. 

I regret not having been able to be with you to 
hear yesterday's fascinating discussion, and I hope 
you shall permit me to avail myself of the privileges 
of a Chairman to say a few words on his own behalf 
before getting discussion under way. 



one with which my office has been very much con- 
cerned, both domestically and internationally. 

According to our Council of Economic Advisors, 
something over one half of total economic growth 
can be ascribed to the introduction of new technolo- 
gy. Although economic growth may not in itself be 
the end objective of a society, it is central to achiev- 
ing most of the social goals and most of the material 
goals. The technological input is central to the 
progress of any country. 

Broad Areas Involved in the Relationship 

In thinking of what might be discussed this morn- 
ing, I hope the discussion will cover the full range of 
the inputs that go into this problem, and not be nar- 
rowly focused. There are surely a number of ingre- 
dients of technological and industrial innovation 
with which governments must be concerned. 

First, they must be concerned with the availability 
of suitably trained people, not only scientists and 
engineers but entrepreneurs, inventors and man- 
agers. Secondly, they must be concerned that re- 
sources for new technology are provided. This in- 
volves risk capital or business credit on proper 
terms, the availability of economic and financial in- 
formation and the availability of scientific and tech- 
nological knowledge to those who innovate. Also in- 
volved are such matters as the development of 
markets for advanced products — and such markets 
may be generated either by the existence of a taste 
for advanced products in the society as a whole, or 
more consciously by government procurement. 
There is the matter, particularly in a free enterprise 
economy like ours, of the creation of a climate for 
innovation in a variety of forms. And each of these 
are matters to which government policies can and 
should be addressed. 



The Relation of Technology 
Growth 



(o Economic 



This general matter of economic growth, and the 
relation of technology to economic growth, has been 



Further, the Federal Government has a central 
role — together with the states and communities — in 
connection with education. It isn't just the question 
of the mass education of people, but the kind of 



73 



/ 



\ 








DONALD F. HORNIG is Special Assistant to the President for Science and Tech- 
nology. He concurrently serves as Chairman of the Federal Council for Science 
and Technology and Director of the Office of Science and Technology in the 
Executive Office of the President. 

Dr. Hornig's early career included research at Woods Hole Oceanographic Insti- 
tution and leadership of a project group at Los Alamos Laboratory. In 1946, he 
joined the faculty of Brown University, subsequently becoming Director of the 
Metcalf Research Laboratory. He later joined the faculty of Princeton University 
where he became Chairman of the Department of Chemistry in 1958 and first 
incumbent of the Donner Chair of Science. 

A native of Milwaukee, Wis. (1920), Dr. Hornig received his B.Sc. and Ph.D. 
degrees in Chemistry from Harvard University. A Guggenheim grant and Fulbright 
scholarship for research at St. John's College, Oxford University, England, fol- 
lowed. Dr. Hornig was the first Bourke Overseas lecturer appointed by the Fara- 
day Society. Some 80 of his papers in the field of physics and chemistry have 
appeared in professional journals. 



education which is provided at all levels. The gov- 
ernment is concerned with the problem of develop- 
ing the basic knowledge and understanding which 
provides the raw material for innovation. In my own 
thinking I draw a rather sharp distinction between 
R&D per se and the innovative process. The two are 
closely related but aren't necessarily the same thing. 
The Federal Government now provides about 75 
percent of the support for research in universities 
which is primarily concerned with the development 
of basic knowledge and the training of people. This 
makes the whole higher education process a major 
Federal responsibility. The Federal Government 
must be concerned not only with the conduct of bas- 
ic research but with the health of the basic research 
establishment and, therefore, the health of the uni- 
versities. There are many problems in carrying out 
this responsibility. 

The Interacting Roles of Government and 
Private Enterprise 

In our society, industrial innovation takes place 
primarily in the private sector. The primary role of 
the government, it seems to me, is to provide a cli- 
mate for private initiative, and it does this through a 
wide variety of processes. Innovation is affected by a 
wide variety of governmental actions which aren't 
themselves technical or scientific. For example, there 
is no question but that in many industries the rate of 
innovation is very much affected by the nature of 
regulatory policies. Regulatory policies in the past 
have been thought of from the standpoint of their 
legal and economic consequences. I don't think 
there has been very much thinking about regulatory 
policies in terms of innovation. Additionally, tax 
policies may be critically important to industrial in- 
novation. Tax policies can be restraints and brakes 
or can provide, as many countries have learned, in- 
centives to innovation. The nature of anti-trust laws 
and regulations and the ways they are enforced are 
clearly important to the innovation process. It is im- 
portant that we maintain an atmosphere and condi- 
tion of healthy competition. On the other hand, care 
must be taken in some cases that the anti-trust laws 
not be used in such a way as to stifle innovation. 

The purchasing policies of the U.S. Government, 
which spends one seventh of the GNP, are impor- 
tant in a variety of ways. In particular, the Depart- 
ment of Defense and NASA together buy probably 



$25 billion worth of highly technical products. Thus 
their purchasing policies can have a very important 
effect. I'm thinking, for instance, of such things as 
the nature of the contracts, how they are written, 
the use of incentive or fixed-price contracts, and so 
on. These all affect the mode of conduct under the 
contracts and the inducement to innovate. 

Finally, there is the matter of new technology. 
This has been generated in great volume, primarily 
through the Department of Defense, the Atomic En- 
ergy Commission, and the Space Administration. I 
won't discuss this point further since it was so thor- 
oughly covered last night. But it seems to me that 
U.S. Government support of new technologies has 
been effective because it hasn't just been an across- 
the-board support of technology per se. It has cou- 
pled the support of new technologies to urgent goals 
which had to be met. I think this has been an im- 
portant feature of the governmental effort. 

An analysis of the mix of all of the things that 
enter into the process of innovation has yet to be 
produced, or if it has been produced, I wish some- 
one would call it to my attention. I hope that, dur- 
ing the course of the discussion this morning, some 
light will be thrown on many facets of this complex 
mix of factors, particularly in the context of a so- 
ciety in which the government and industry play 
complementary roles. 

I think you know that the Department of Com- 
merce, as its name implies, has a key role in these 
problems. However, the problems cut across all 
parts of our Government, so many of them can only 
be dealt with at the level of the White House. 

The Need for Close Industry-Government Dia- 
logue 

Before turning this session over to our co-chair- 
man and to the speakers, I want to say that progress 
in this direction — the development of wise govern- 
mental policies — requires a good and close dialogue 
between government and industry. One of my own 
hopes is that we will improve this dialogue and I 
hope to take some additional steps myself in that 
direction. This symposium is one of the most impor- 
tant steps I have seen recently in improving the dia- 
logue and the conversation among the various par- 
ties concerned with the creation and use of 
technology for economic growth in all of our coun- 
tries. 



256-707 0-67— 6 



75 



Dr. Hornig: It is now my privilege to introduce the 
first of our speakers this morning, Mr. Robert Major, 
who is the Director of the Royal Norwegian Council 
for Scientific and Industrial Research. 



Mr. Major: It is a pleasure and an honor to address 
this distinguished group on the important theme of 
the impact of the policies of government on the 
creation and use of technology for economic growth. 

I will discuss this theme by trying to answer the 
following questions: In the first place, what are the 
main factors in building up national technological 
research potential? And second, what is the role of 
government in building up these potentials? That is, 
how can government stimulate the creation and use 
of technology for economic growth, and what do 
governments do about it? Third, what should we ex- 
pect governments to do in this field in the future? 

Building National Research Potential 

Let us briefly look at the factors which build up 
the national research potential. There is a need for a 
system capable of educating in quantity and in qual- 
ity all personnel needed for national research activi- 
ties and for industry, and for other activities making 
use of research results. There is a need for funda- 
mental research institutes in the universities, or as 
separate organizations to pursue the search for new 
knowledge, thereby also nurturing applied research 
activities and giving inspiration to higher education. 
There is a need for applied research institutes and 
laboratories which can assist in solving the practical 
problems which are faced by a government of our 
time, and which can also help in the development of 
production methods and of new products throughout 
industry. There is a need for a technical information 
system which brings an ever increasing knowledge 
from national or international research to the people 
needing it in the form and at the time they need it. 

But all this is not enough. Knowledge acquired in 
educational systems is only useful for economic 
growth when the educated personnel learn how to 
use it in industrial activities. And research itself has 
no economic value until it has been built into new 



processes or new products. There is also need for 
dynamic industry which has the right structure and 
management open to the exploration of research it- 
self, sufficient risk capital, and a market big enough 
for the product. Without such a dynamic industry, 
even first class research itself would have no bearing 
on the economic growth. It is further necessary to 
understand the interplay of all these factors and to 
create a natural climate for development of all these 
factors. 

Government's role in this picture varies from 
country to country, depending on the degree of in- 
dustrial development, on the national goals. I do, 
however, think it right to say that in all countries 
government's role is growing. This is partly due to 
the growth of research activities, but also due to the 
fact that it was not until lately that most govern- 
ments have discovered the roles government could 
and should play. 

Let us look at the situation in regard to different 
factors I just mentioned. 

Planning the Educational Program 

The most striking example of government growth 
in the fostering of education is perhaps the develop- 
ment of the educational system in Soviet Russia dur- 
ing the last decades, which was so well described in 
Nicholas de Witt's books. This is an example of 
how a government decision, under that particular 
regime, followed by long-term action, can change 
completely one of the conditions for economic 
growth in a nation. 

In Western countries, education facilities have 
traditionally been developed through an interplay of 
initiative from private quarters, municipalities, states 
and the national government. We all remember what 
happened in this country after the first Sputnik in 
'57. A strong government policy mobilized the 
whole education system in a joint effort to expand 
education in quality and quantity, an effort which 
has had far reaching effects in this country. 

The most striking recent work in this field in 
Western Europe has in my view taken place in the 
OECD. In cooperation with the Committee on 
Scientific Personnel, the Directorate of Scientific 
Affairs of OECD has built up a milieu which has 
made thorough studies of most of the relevant ques- 
tions which have a bearing on the supply and de- 
mand and also use of scientific and technical person- 
nel in many of the countries. 

The OECD's work has very strongly influenced 
educational policies and planning in most European 



76 




ROBERT MAJOR is Director of the Royal Norwegian Council for Scientific and 
Industrial Research, an organization which he has headed since its formation in 
1946. Under his guidance, the Council has established a number of specialized 
research institutes, including the Norwegian Institute for Atomic Research which 
operated the Dutch-Norwegian Joint Establishment for Nuclear Energy Research 
in cooperation with its Dutch counterpart. 

As Norwegian representative to the OECD Science Committee, and earlier to 
the OEEC Committee for Productive and Applied Research, Mr. Major has repre- 
sented Norway at numerous international meetings concerned with scientific and 
industrial research. In addition, he has served as a member of the Norwegian 
delegation to the first and second United Nations "Atoms-for-Peace" Conferences 
held in Geneva in 1955 and 1958. 

A native of Oslo, Norway (1914) Mr. Major received his Master of Science 
Degree from Oslo University in 1941 , then serving a period as Scientific Assistant 
there. He saw war service with the Norwegian High Command during the period 
1 94 1 -1945 , and was Secretary of the Committee for the Organization of Scientific 
and Industrial Research in 1945 and 1946. 



countries, and I think also it has had something to 
say for work here. With the rapid growth and 
change in the demand for various types of person- 
nel, and in view of the long time it takes from the 
decision to build an educational institution to the 
time when new candidates have been educated, the 
need for a national analysis of the comprehensive 
future requirement of personnel and the need for 
policy and planning by government, has now been 
understood and, I think, accepted in practically all 
the Western countries. 

The rapid advancement of knowledge also de- 
mands a constant change of curricula and new 
teaching methods. This situation will demand, at a 
growing rate, a re-education of people working in all 
branches using science and technology. This will 
probably mean that very soon a considerable part of 
the population will have to use at least 25 percent of 
their time for re-training all through their working 
years. There is also in many countries the view that 
more should be done in the educational system to 
encourage the development of creativity. 

The current explosion in education and the rapidly 
growing need for increased investment in education 
have made the role of government all the more im- 
portant in all countries. Governments in Western 
countries discharge their responsibilities in the edu- 
cational section by various means. Sometimes it is 
through the establishment and direct control of edu- 
cational facilities; in other cases it may be by means 
of financial contributions distributed through proper 
channels or agencies to the educational establishment 
run by states, municipalities, or by private initiative. 

This growing demand and rapid change through- 
out the educational field puts a rapidly growing 
strain on government resources and initiative. No 
country has yet reached anything like maximum de- 
velopment and use of its talents. I believe that much 
is yet to be achieved through an interplay of people 
in government, in the educational system, in in- 
dustry and in other activities needing trained person- 
nel. 

Fundamental Research 

Fundamental research is, I think, now recognized 
in most governmental circles as basic to the develop- 
ment of new technology, and as a factor of impor- 
tance for economic growth. The results of funda- 
mental research are on the whole common property, 
and it has therefore been recognized that govern- 
ments must carry the main part of the financial re- 
sponsibility for its pursuit. In spite of this economic 
dependence, there has been a general understanding 



for many years that decisions regarding how money 
for fundamental research should be spent should be 
left to the academic community. 

During the last decade the pursuit of knowledge, 
particularly in the physics field, has as we know de- 
manded ever more expensive installations, such as 
accelerators, radio telescopes, et cetera. We've got 
"big science," which now in most countries takes a 
growing part of the economic resources available for 
fundamental research. 

In advanced countries, between ten and twenty 
percent of the overall R&D expenditure is now 
used for fundamental research. This corresponds to 
between .1 and .3 percent of the Gross National 
Product. The development of "big science" has, par- 
ticularly in small countries, but increasingly in the 
medium sized and big countries, strained the finan- 
cial resources for fundamental research. For the 
small country it is now impossible to take part in the 
forefront in all fields, and also for the medium sized 
countries it is becoming more and more difficult. 
This has created strong pressures for establishing 
criteria for the allocation of resources for funda- 
mental research. And as governments are the main 
source of money this will of necessity force govern- 
ments to take part in priority decisions. 

I think so far too little thought has been devoted 
to the situation which becomes more and more criti- 
cal. Especially for the small countries, some re- 
thinking and adaptation to the new situation seems 
to be required. The general tendency is to try to 
copy the big countries' research pattern and take an 
active part in all fields. This will, to my mind, have 
to be replaced by more modest and realistic goals. 
There are still many fields of fundamental research 
offering great scientific challenges which can be pur- 
sued within a modest financial frame. In more ex- 
pensive fields, there are possibilities for the estab- 
lishment of cooperation with other nations. 

I believe the time is right for government, 
specifically in smaller countries, in close cooperation 
with the representatives of their academic institu- 
tions, to study how fundamental research in the fu- 
ture can best be pursued for the benefit of the 
country within the financial resources which can be 
expected to be made available. 

The Governmental Role in Applied Research 
and Development Work 

Government's role in the field of applied research 
and development work falls mainly into three cate- 
gories. First, in certain fields where government 



78 



has its own activities such as defense, government 
will itself be responsible for the creation and use of 
the appropriate technology. Second, as government 
is interested in the over-all national economy, it must 
also feel a responsibility for stimulating the creation 
and use of technology all through industry, particu- 
larly in those industries which are not in a position 
to take the necessary steps themselves. Third, gov- 
ernment is also responsible for development of a 
general national climate conducive to the creation 
and use of technology throughout society. 

Fields of Government Influence 

The technological fields where government is re- 
sponsible for activities vary from country to country. 
In all countries it includes defense. In many coun- 
tries it includes telecommunication systems, power 
supply, roads, railways, and also the search for and 
conservation of natural resources, environmental 
pollution, etc. In addition, of course, there are 
the more recent programs such as those concerned 
with space. 

Governments usually apply two different meas- 
ures for the creation and use of technology in these 
fields — the establishment of government research in- 
stitutes, and the contracting of research and devel- 
opment programs to industry. The balance between 
these two tools varies strongly from country to 
country. 

The establishment of government research insti- 
tutes is the oldest method, and, particularly in coun- 
tries without a heavy commitment in the defense 
field, it still seems to be the more important one. 
Many of these institutes have performed excellently. 
I think, however, it is a general experience in many 
countries that research doesn't always prosper in a 
rigid government system. In some countries there is 
a move to establish institutes of this type as semi- 
governmental institutions, thus giving them greater 
flexibility in their operations. 

The contract system has been developed mainly 
in countries with heavy defense and space commit- 
ments. As you know, the United States now spends 
approximately eighty percent of government R&D 
funds for military and space purposes. About three 
quarters of this money is used for R & D contracts 
to industry. This represents more than fifty percent 
of all R & D activities performed by industry. This 
is a volume which is many times higher than the 
total of all European R&D contracts of this type. 
The impact of this on industries working for defense 
and space, mainly the aerospace industries, is im- 
mense and well known. 



Influence of Military R & D on Civilian 
Economy 

The spill-over effect for civilian industry is, as we 
know, difficult to ascertain and much debated. 
Everybody seems to agree that there is considerable 
and valuable transfer to civilian technology. How- 
ever, they also agree that the transfer is not big 
enough, leaving to the responsible government cir- 
cles the problem of increasing this transfer through 
the dissemination of reports, exchange of personnel, 
etc. 

I believe that a good many of the people in this 
auditorium know more about this subject than I, 
and I shall therefore not go into detail, but I would 
like to mention that these types of R & D contracts 
are very rare in many countries where the defense 
activities are at a relatively low level and space ac- 
tivity hardly exists. As many industries in these 
countries have to compete in the world markets, it 
has become a problem for those nations to find ways 
and means whereby they can stimulate their indus- 
trial technology to make up for this deficit. 

This leads me to the next point — how the govern- 
ment can stimulate creation and use of technology in 
fields where government has no administrative re- 
sponsibilities. The old established method for this 
stimulation is the creation of government research 
institutes working in specific fields like agriculture, 
fisheries, raw materials research, and also the crea- 
tion of institutes to establish national competence in 
fields of general interest to industry, such as weights 
and measures, standards, etc. We all know that 
there is a great variety of examples of the high value 
of activities in institutes of this character. 

Research Associations and Sponsored Research 
Institutes 

A more recent development, which has taken 
place mainly in Europe, is the establishment of re- 
search associations. As is known, these work on mu- 
tual problems for specific branches throughout in- 
dustry. There are in Europe approximately four 
hundred of them. 

The volume of work in these institutes in the indi- 
vidual European countries varies from a few percent 
up to ten percent of the R & D work performed by 
the industry as a whole. Most of the institutes have 
a government subsidy varying from zero up to sixty 
percent of the total income of the institutes. 

A considerable portion of the activities of these 
organizations involve technical information activi- 
ties. The main purpose of the Research program is 



79 



to increase the quality of existing processes and to 
improve the quality of existing products. The pro- 
grams are therefore usually unspectacular in nature 
and this type of laboratory has appeared to be use- 
ful mainly in old established industries. The over all 
usefulness of these institutions is debated. I think 
that on the whole this is because many of them are 
too small or have been established in industries 
which they are unsuited to serve. 

Since the last war there have been established in 
many European countries sponsored research insti- 
tutes of the Battelle Memorial type. They work 
mainly for research-based competitive industries. A 
good many of them receive financial support from 
governments to enable them to establish competence 
in fields that are considered to have a general na- 
tional interest. 

Method for Governmental Stimulation of 
R & D in Industry 

Particularly in countries with few R&D contracts 
from defense, space and atomic energy, a need has, 
as mentioned, been felt to compensate for the ab- 
sence of spill-over effect such as benefits civilian in- 
dustries in the United States and some of the other 
countries. We can here on the whole distinguish 
among three different methods which have been 
taken by the government. First, the development of 
a procedure whereby government agencies procuring 
products of advanced technology are authorized to 
give R&D contracts to national companies to en- 
able them to compete on a more favorable basis 
with the big international concerns. To administer 
such programs effectively, the government agency 
must build up a staff competent in long term plan- 
ning, for the working out of specifications and 
for handling of R & D contracts. The administration 
of such programs also calls for the wise selection of 
fields in which to encourage the development of na- 
tional industries. 

Second, in many countries, companies which have 
valuable ideas for innovation are unable to finance 
innovation costs or to get loans through the usual 
credit institutions. To meet this situation, several 
governments have established so-called development 
funds, which function as a bank with risk capital, 
giving loans to cover up to fifty percent of the devel- 
opment cost of a project. When successful, the com- 
pany will repay the loan with interest. When the 
project is unsuccessful the loan will be waived. Some 
organizations of this type also take an active part in 
the exploitation process, like the National Research 



Development Corporation in Great Britain, which 
can draw on a government credit of up to 
twenty-five million pounds. Others act like banks 
and leave the exploitation to the manufacturing 
company. Some of these new agencies seem to have 
had success with several of their projects but it is 
yet too early to judge their importance as a whole. 

Third, in certain countries research councils or 
similar agencies, which usually spend their money in 
research institutes, have lately been allowed to 
spend money also in industries with the aim of 
building up national competence in new subject 
fields, such as systems engineering and the like. Be- 
cause of the government financing, there is usually a 
requirement that the general results of these re- 
search projects be available to other firms in the 
country. 

The above mentioned three procedures, R&D 
contracts from government agencies to industry as 
part of the buying procedure, the establishment of 
development funds, and the use of government mon- 
ey to build up technological competence in industry, 
are on the whole relatively recent developments. 

The ideal situation for a country is of course, that 
industry is so strong and viable that this type of 
stimulation is unnecessary. The stimulus is felt to be 
needed partly because the financial resources of in- 
dustrial units in many countries are too small to de- 
velop competence in new technological fields, and 
partly to compensate for the absence of the spill- 
over effect which prevails in other countries. There 
is, however, the danger that these measures can be 
used to conserve industries which would never be 
competitive, and they should therefore be used with 
great care and wisdom. 

Judging from recent trends it is, however, likely 
that these activities will play an increasing role in 
government policies to create and use technology in 
the years to come. 

The Need for Technical Information Centers 

With the growing flow of technical information, 
it is a problem, specifically for smaller firms, to 
acquire all the information needed for their produc- 
tion. In most countries, governmental or semi-gov- 
ernmental organizations therefore have established 
information centers and advisory services of various 
kinds. There seems to be a general feeling in many 
countries that compared to the money and effort 
spent on research projects, the investment to make 



80 






sure that existing knowledge is being effectively used 
in industry is much too low. 

The Climate for Research 

In addition to all these activities of a more con- 
crete character that I have mentioned, governments 
can stimulate technology and its use through the 
creation of a general industrial climate conducive to 
research activities and the exploitation of research 
results. Activities of this kind include the develop- 
ment of taxation systems with the right financial in- 
centives, suitable patent policies, and general en- 
deavors to remove obstacles such as customs 
barriers, thereby creating bigger markets for the sale 
of industrial products. These indirect general meas- 
ures can have a profound influence, but I under- 
stand that they will be covered later today and I will 
not go into detail. I will just mention them as a very 
important method in the hands of government to 
stimulate the creation and use of technology. 

International Cooperation and Government 
Policy 

One aspect of government policies for the crea- 
tion of technology which will no doubt grow in im- 
portance is international cooperation. I think it cor- 
rect to say that the greater part of international 
exchange and collaboration in the scientific and 
technological field, both among scientists and com- 
panies, has grown up without any government initia- 
tive and will continue to do so. But with the growing 
role of government in the national scene, govern- 
ment policy will also have a strong and growing 
influence on international activities. I can mention: 
government policy for declassification and dissemi- 
nation of reports from government financed re- 
search; bi-lateral agreements between governments 
for research cooperation in fields that require big 
research investments, such as atomic energy, space, 
et cetera; and multilateral cooperation in general in- 
ternational organizations like the United Nations 
and OECD, and in international research organiza- 
tions like the European Nuclear Physics Organiza- 
tion (CERN) in Geneva, or the European Space 
Organizations, ESRO and ELDO. 

I think that not all of these international activities 
sponsored by governments operate quite efficiently, 
but they serve their useful purpose for exchange of 
information and make it possible for small and me- 
dium sized nations to take part in "big science" ac- 
tivity. I think, also, scientists usually find it easier to 
agree than politicians and I believe that the interna- 



tional atmosphere created by scientific cooperation 
can be an important factor for the stimulation of 
world trade. 



The Technological Gap 

I had intended here to discuss the so-called tech- 
nological gap between the United States and Europe. 
After the Vice-President's speech last evening, I 
will, however, just say very briefly that it seems to 
me we often think wrongly with regard to this gap. 
To my mind, it is not so much a question of tech- 
nology as of mentality and attitude. In your country 
here you have quite an eye for the future; you have 
a dynamic industry, and you have built up mana- 
gerial skill and big markets. I think the difference 
in all these factors is very much more important 
to explain the gap than the difference in science and 
technology. We need a better diagnosis of the tech- 
nological gap between Europe and America before 
we start to suggest remedies. 

Overall Financial Resources for R&D 

The growth of government activities in the re- 
search and development sector demands increasing 
financial resources. As you all know the total R&D 
effort in the industrialized OECD country varies 
from approximately one percent up to some three 
percent of the GNP. Now these expenditures can be 
divided into three categories: R&D expenditure for 
defense purposes, which varies in the different coun- 
tries from 0.1% to 1.6% of the GNP; government 
R&D expenditure for civilian activities which 
doesn't vary much at all — it is approximately 0.5% 
or a little lower for all industrialized countries; and, 
third, research and development expenditures in 
the private sector, which varies from 0.3% to a little 
over one percent of the GNP. 

Now, taken altogether, government financial con- 
tribution to the R & D effort varies from 0.5% to 
approximately two per cent of the GNP. In percent- 
age of gross national R&D expenditure, govern- 
ment contribution makes up from thirty percent as 
in the Netherlands, up to more than sixty percent, 
as is the case in this country. All governments in the 
advanced countries now see the importance of these 
activities for the culture, for the economy, welfare, 
and security, and are spending an increasing share 
of national financial resources in this sector. But we 
may, of course, ask how wisely do they spend their 
money — what systems have they developed to evalu- 
ate the programs and what is their efficiency in all 
this work? 



81 



Efficiency of the Technological Effort 

On the whole, I believe a historian some years 
hence who will write about science in the present- 
day society will find that the efficiency of the over- 
all system was then not too high, although it varies 
considerably from country to country. Most coun- 
tries are still experimenting to find out how best to 
organize themselves to evaluate programs, to estab- 
lish criteria and priorities. They also must choose 
the fields in which they wish to concentrate. This is 
particularly true of the smaller nations. 

Some countries have established a ministry for 
science which is responsible for the broad policy 
decisions. Examples are France, Germany, and for 
a time, also, Great Britain. 

Others find that research activities will have to 
be an integral part of practically all the different 
ministries' activities and find it difficult to concen- 
trate the responsibilities in one ministry. Their solu- 
tion is usually one or more national committees 
for science policy close to the president or prime 
minister, to give general advice. They leave ad- 
ministration of programs to the different ministries 
or established agencies. Examples here are in the 
United States, Belgium and the Scandinavian 
countries. 

What seems essential in all systems is to develop 
enough people with a thorough and broad knowl- 
edge of how science works and how the results can 
be exploited in industry, people who can serve in 
government departments on advisory committees at 
different levels, and in semi-governmental and indus- 
trial research organizations. It is only through the 
interplay of such people that good proposals for 
government action can be worked out and wise de- 
cisions reached. 

If we see government's role in the creation and 
use of technology in perspective, there has been a 
rapid growth both in direct responsibilities, in the 
allocation of money and in results obtained. It 
represents, all together, I think, an impressive im- 
pact. To my mind there is no reason to believe that 
this trend will change in the immediate future. This 
is a consequence of the growing complexity of life in 
society and also of the inherent nature of science 
and technology. 

The growing reservoir of knowledge to be passed 
from one generation to another and the better edu- 
cation of a larger number of people needed for the 
type of occupation we can foresee in the future so- 
ciety, will increase the responsibilities in the educa- 
tion sector. The need for ever more comprehensive 



technological knowledge in all branches of industrial 
life, the growing complexity of each subject and the 
growing need for cooperation will increase the de- 
mand for government measures to stimulate tech- 
nological development. 

Government's Future Role 

What sort of technology-based activities govern- 
ments will administer in the future is more difficult 
to foresee. With China in the picture, it is most like- 
ly that defense activities will continue. Space re- 
search is most likely to continue, at least at its 
present scale, unless joint programs should be es- 
tablished with the Soviet Union, in which case a 
good deal of the national prestige and competition 
might disappear. Development of the fission process 
for the production of energy seems on the whole to 
be passing over to industry, but it is not unlikely 
that demand for increased government support for 
development of new sources of energy will be re- 
quired in the future. 

We have, I think, passed through an age of chem- 
istry, we are in the age of physics, and I believe we 
are on our way into a biological age. This will open 
up new aspects and possibilities which may quite 
drastically change our way of life. We must expect 
that in the years to come we shall be thinking not 
so much of our standards of living, but of our stand- 
ard of life. Much more emphasis will no doubt also 
be given to environmental research and the urban 
problems, transportation systems, et cetera, and 
in all these fields it seems likely that government 
will have to be heavily engaged. 

I think that in most countries there is need for a 
much stronger harmonization of research activities 
with the over-all national goals. Too many small 
countries tend, in their research efforts, to copy re- 
search activities of bigger countries, forgetting about 
the high threshold value for realistic activities in a 
growing number of fields. Considering the immense 
effort put into the actual research work it will, to my 
mind — with these problems of size, priorities, selec- 
tion and choice that most countries have to face — 
be necessary to devote greater efforts to the develop- 
ment of well-conceived and realistic science policies. 

In many fields the best results will only be 
achieved when countries are brought together in co- 
operation in a more meaningful and cohesive pat- 
tern. Those countries which will be the most able to 
master all these problems will to my mind have a 
great advantage, both for economic growth and for 
life in society as a whole in the years to come. 



82 



Dr. Hollomon: To continue our discussion of the 
impact of policies of government, we bring to you a 
person who has long been engaged in industrial ac- 
tivity, and whose training is not in technology or 
science. He is especially interested in marketing. Re- 
cently, however, he has made two excursions into 
the government realm. In one of these, he is serving 
on a special panel that is advising the Secretary of 
Commerce on the climate for invention and innova- 
tion in our society. 

A member of that panel said at one of its later 
meetings, "I'm not sure that we should ever tell any- 
body about the real result of our work because, you 
know, there's a great story and myth going around 
that all we have to do is to do lots of R&D, then to 
give R&D away and to help people to trade, and 
ultimately everything will work fine. Most of the 
world believes that. Our real secret in this country is 
the fact that a young fellow has a chance to go out 
and start a small new business on his own without 
having to work through established organizations or 
the conservative constituencies." 

Some of the panel thought, good humoredly, that 
we ought to keep this report secret, because other- 
wise we might lose our competitive advantage. We 
decided to make it public and take the risk! 

I would like to introduce to you Mr. Peter G. 
Peterson, the President of the Bell and Howell Com- 
pany. 



Mr. Peterson: I noticed that we had some French- 
men in the audience and if they won't mind I'll tell a 
little story about the French acrobat, Blondeau, that 
I hope helps me make a point about the lead of the 
United States in technology. 

As the story goes, Mr. Blondeau, the French 
acrobat, was crossing the Niagara and he was not 
only crossing it on a tightrope but he was carrying a 
man on his back. There were a million-and-a-half 
people watching this extraordinary feat of the 



Frenchman, including the President of the United 
States, the Prince of Wales and so forth. About a 
quarter of the way across, the man who was on the 
back of the Frenchman looked down at him and 
said, "Don't you think that we should reconsider? 
Don't you think that we should perhaps go back?" 
At which point — roughly translated to suit my pur- 
poses here today — Blondeau was reported to have 
said, "Just because you're on top doesn't mean you 
know where you're going." 

So we need to remind ourselves of that. 

Let me talk briefly about the panel that Dr. Hol- 
lomon talked about. We spent eighteen months 
studying innovation.* The chairman of our commit- 
tee was Dr. Robert Charpie of Union Carbide. The 
panel membership consisted of prominent men in 
business, education and the professions. 

R&D and Innovation 

One of our early conclusions was that there had 
been so much emphasis and so much impressive da- 
ta on how much this country spends on research and 
development that we wondered if there hadn't been 
too much emphasis placed on that. So, early in our 
study, we decided to make the distinction between 
invention and innovation. 

I want to make the important distinction that we 
did between invention, which is to conceive — it's the 
idea — and innovation, which is the using, the proc- 
ess by which the invention gets translated into a 
product and brought into the market place. And if 
we're really interested in growth and the things that 
affect the quality of people's lives, we emphasize 
over and over again in our report that we really had 
to concern ourselves with innovation, not just re- 
search and development. 

I'll make a perfectly obvious point now to those 
of you who are sophisticated in business. We no- 
ticed in our study that many people in government, 
and to a certain extent in universities, tend to think 
that innovation and R&D are the same phenomena, 
and if you just have more research and development, 
in some simplistic way — almost automatically — you 
get more innovation. 

So in our report we presented some distribution 
of costs — as shown in Chart 1 . 

We simply put together the experiences of our 
panel members to make a point that we thought 
needed making: that the businessman looks at the 



* The full report of the Panel, Technological Innovation: Its Environ- 
ment and Management, is available from the Government Printing 
Office, Washington, D. C. 20402 



83 



innovation process as a totality, as a total venture, 
not just as an R&D expenditure. 

And that in many, many projects the research and 
development, the idea stage, is really a small part of 
the total investment. In the case studies we looked 
at it was only about five to ten percent of the total 
process. We said to ourselves, therefore, if you're 
seriously interested in innovation you really can't 
pretend that the only incentives you need to offer — 
the only counsel you need to offer — is on how to 
invent, how to conduct R&D. 

Why Should the Government have an Interest 
in Innovation? 

We then went into the area of why should the 
government be interested in innovation. I won't bore 
you with the familiar statistics of how important in- 
novation is, that it accounts for half or more of the 
growth of our Gross National Product, eighty-five or 
ninety percent of the increase in real output. 

We decided that we ought to make this point a 
little more vividly. We chose three technological in- 
dustries — television, jet travel, and digital computers 
— that virtually did not exist in 1945, and found that 
by 1965 they had contributed more than thirteen 
billion dollars to our Gross National Product and 
something approaching a million jobs (Chart 2). In 
addition, these three innovations obviously affected 
our lives in a very important way. 

Another thing we did, in order to make vivid the 
point of how important technology is in terms of our 
economy, was to take five companies in this country 
that one could refer to as being technologically inno- 
vative companies, and see the thrust of these com- 
panies, which were by and large rather small com- 
panies or nonexistent in 1945. We can see in Chart 
3 that these companies had an annual sales growth 
of nearly seventeen percent, whereas during the 
same period of time the Gross National Product of 
this country grew at a rate of two-and-a-half per- 
cent. 

Next, we asked, what is the impact of innovation 
on international trade? You all have seen the data 
on the balance of payments, and of course we in- 
cluded that in our study, but we also included some 
specific examples to make the point that a gross 
number, like what happens to our total balance of 
payments, often obscures the fact that the real factor 
that underlies this growth has been in high-technol- 
ogy products. 

For example, in the textile industry we chose cot- 
ton, wool and synthetic fabrics. If you study the da- 



ta over only a ten-year period from 1956 to 1965, 
you will see that cotton and wool exports declined 
roughly a third whereas the exports of our high- 
technology synthetics went up from a hundred and 
fifty-eight million to two hundred and forty-one mil- 
lion (Chart 4). Thus, had it not been for the high 
technology product, I think it's pretty clear that our 
textile exports would have actually decreased. So, 
we had a section of our report that dealt with why 
innovation is important in practical, meaningful dol- 
lar and cents growth terms. 

Innovation and Competition 

As you've sensed, our country is also enormously 
interested in competition as well, and we wanted to 
make the point that we didn't think was made as 
often as it should, with regard to what technology 
has done to competition. This point concerns a com- 
parison of the traditional forms of competition ver- 
sus what we call the "new" competition, represented 
by the high-technology businesses. In the traditional 
forms involving largely non-technological businesses, 
this is often largely price competition between fairly 
similar products. But when you look at the new 
competition, the high-technology competition, you 
usually see entirely new categories of products that 
perform old functions much better or entirely new 
functions. Obvious examples in this country: xerog- 
raphy, synthetic wash-and-wear fabrics, instant 
photography. And these new competitors have — be- 
lieve me, because we have "enjoyed" the "stimula- 
tion" in one or two of our businesses — enjoyed the 
astringent effect of this kind of competition. 

There is another aspect of the new competition 
versus the old. Traditionally, in the nontechnological 
businesses in this country, we've had familiar com- 
petitors long-established. There's a tendency to get 
to know each other well, a tendency to have discus- 
sions, and there have even been a few occasions in 
which there has been a kind of collusion, whether 
conscious or unconscious. 

But when you look at the new competition you 
often see competitors who are unfamiliar. They're 
called "outsiders" usually. Let's look again at some 
of them. We need only to remind ourselves that syn- 
thetic fabrics were not invented or developed by the 
textile business but rather by the chemical industry. 
Or, look at high-speed ground transportation. We 
might have expected all of this to come from rail- 
roads or automobiles, yet aerospace and electrical 
manufacturers have played a major role here. 






84 




PETER G. PETERSON began his business career in 1948 with Market Facts, 
Inc., a Chicago firm specializing in marketing counsel and research on consumer 
and industrial goods. He was elected executive vice president in 1952. In 1953 he 
joined McCann-Erickson, Inc., advertising agency, as director of marketing serv- 
ices. He became a vice president in 1954, general manager of the Chicago office in 
1956, and a director in 1957. 

He joined Bell & Howell Company in April, 1958. As executive vice president 
he headed the company's Photo Products Division as well as Bell & Howell's 
corporate market planning and product development programs. He also served as 
chairman of the corporate research board. 

In April of 1961, at the age of 34, he was elected president of Bell & Howell 
Company. His responsibilities were further broadened in July, 1963, when the 
board of directors named him chief executive officer of the corporation. 

Mr. Peterson is a graduate of Northwestern University and the University of 
Chicago Graduate School of Business. 



Instant pictures were not developed by the pho- 
tographic industry or a company that had been 
thought of as being part of the photographic in- 
dustry. Xerography was created and developed by a 
company that was outside of what we called the 
business equipment business. 

Some Characteristics of Innovation in America 

Now rather than just look at the total gross dol- 
lars on R&D, we decided that it would be interesting 
and perhaps fun to try and understand the variation 
in the expenditures in research and development. 
We looked at jour kinds of variations. 

First, public or social investment versus private 
sector investment. I wish we had the time to discuss 
this subject at this meeting, but it's clear that certain 
very important problems facing this country are not 
getting much R&D investment, and it's also very 
clear that the private enterprise mechanism, because 
of the great uncertainty and the great risk, is proba- 
bly not the right kind of mechanism to get appropri- 
ate R&D investment in this area. 

But within the industrial complex we noticed 
something else when we studied the output of inno- 
vation, from one region or city of America to the 
other, in one industry versus another, and for small 
versus large companies. Let me briefly take you 
through some of the findings, and I must say that 
this is not highly statistical data but, rather, personal 
experience of the panel members. 

One of the things that becomes very clear in 
America is that you can take eight or ten cities in 
this country and look at the data on R&D invest- 
ment, on numbers of scientists, on numbers of en- 
gineers, and then apply common sense tests on 
numbers of new businesses, numbers of tech- 
nologically based new enterprises that are being 
formed, and you will often find a substantial 
difference between one area and the next that does 
not seem to have much to do with how much money 
is spent on research and development. 

In America, for example, there are several areas, 
Boston, Palo Alto, Washington, Pittsburgh, in which 
you will see the spawning, the nurturing, the con- 
ception of many of these important small new busi- 
nesses, some of which we might hope would be the 
Texas Instruments, Xeroxes, and the Polaroids of 
1985. 

But in other cities — my own city of Chicago, or 
Philadelphia — in spite of substantial R&D invest- 



ments we do not see many of these new kinds of 
technological businesses being spawned. 

We were also impressed with the obvious fact that 
there are tremendous differences in R&D invest- 
ments by industry in this country, with steel, for ex- 
ample, spending about one-tenth of what the drug 
business spends in this country — shown in Chart 5. 

Now to be sure, part of this is inherent in what 
kind of business it is. Quite frankly, gentlemen, we 
come to the conclusion that only part of it is due to 
what kind of industry it is. When you get behind 
some of these numbers and look at some of these 
industries, you're led to believe, at least, that the 
problem often is that the top managements of some 
of these industries have not yet learned to manage 
technology, and that in a curious sense this is per- 
haps an important reason why they are not spending 
as much money on innovation. And this is also the 
reason, we suspect, that some of these same indus- 
tries are not innovation industries. So, a lot of it has 
to do with skill and managing technology and atti- 
tudes toward technology, not the inherent economics 
of the business itself. 

We look at the variation in R&D by size of com- 
pany in Chart 6, and the point here is that the small 
businesses — those with less than a thousand em- 
ployees, which account for a very large percentage 
of the companies — account only for a very small 
percentage of the R&D done in this country. It is 
estimated that some three hundred companies in 
America account for something over ninety percent 
of the research and development. 

We tied this particular finding in with something 
else. We looked at several studies that we could find 
on innovation in the United States. There has been 
one rather classic study, by a group of men who 
went back and studied the origin of the most impor- 
tant commercial innovations of the twentieth cen- 
tury. Now keep in mind that this is in the era, to a 
certain extent at least, that we have thought of as 
the era of the large company R&D laboratory. 

When you look at these inventive contributions — 
as shown in Chart 7, you see outstanding examples 
of enormously important commercial innovations in 
this country — Xerography by inventor Chester Carl- 
son, the vacuum tube by an individual, the cyclotron 
by an individual, automatic transmissions by a 
small-company individual, the Polaroid camera, ob- 
viously by a small company individual. The point 
being that there is some impressive evidence that the 
small inventor, the individual inventor, the small 
businessman, contribute to the innovative flow in 



86 



this country, at least, to a substantially larger extent 
than the amount of money he is spending on re- 
search and development. 

Then we look at five other studies of innovation 
in the United States and they make the same point, 
that small businesses are responsible for an impor- 
tant portion of the significant inventions and 
significantly larger percentages than their small in- 
vestment in R&D would suggest. 

At this point our study then went down two 
tracks. I don't want to sound here as though I feel 
that large companies are dispensable in this process. 
They have a unique and a vital contribution to make. 

On the other hand, we did decide that, given this 
kind of input on how important small companies 
were, if we were really going to study the innovative 
process in America we'd better break down the 
process into large companies and small companies. 

The Innovative Process in the Large Company 
Environment 

First, let us consider the large company in Ameri- 
ca, and the kind of growth problem it faces. In 
America we have all sorts of clubs with varying de- 
grees of exclusivity. One of the more important 
clubs is the Billion Dollar Club. And we've decided 
to look at the Billion Dollar Club's growth problem 
the way it does (Chart 8). It has annual sales of a 
billion dollars. It wants to grow at least ten percent 
a year. Some of its old products decline about five 
percent a year. There is some price erosion due to 
competition and technological competition. If it 
wants to grow 10 percent a year, it must make up 
the seventy million it loses from price erosion and 
industry decay, plus another hundred million or so 
from new businesses and new products. So this com- 
pany has to find a hundred and seventy million dol- 
lars a year of growth if it's to meet its objectives. 

Now, what we've done in our report is to try to 
categorize the problems that this company has — as 
shown in Chart 9. They're really different problems 
— not just in degree, but in kind — from the small 
company's. 

We see here this whole early stage of business 
planning very much concerned with words we're 
using more and more in this country — venture analy- 
sis, directional planning, strategical planning, busi- 
ness objectives. In short, where do we want the 
business to go? 

There are some problems here. Problems like, "It 
wasn't invented here." A friend of mine thought that 
N.I.H. stood only for the National Institutes of 



Health. I told him that in this country a far larger 
membership was the membership of the "not invent- 
ed here" club. A big company has the problem of 
understanding that important inventions in the com- 
pany will not come always from the inside, as this 
study has demonstrated. 

The new idea then goes through a second stage, 
the important stage of experimental appraisal. Here 
big companies are often missing entrepreneurial 
skills. I have talked to the heads of many large com- 
panies about this and when I asked them what their 
problems were they said quite often, "We are miss- 
ing entrepreneurs; we are missing the men who can 
create businesses that have never existed before." 

Then, very often, innovation within the large 
company moves into what we call the embryo stage, 
where one sets up small businesses and tries them 
out. A very delicate problem the big company has, 
as we have discovered at least in this country, is that 
if we take these embryo businesses and put them in 
existing operating groups or existing divisions they 
often get crushed or ignored. One of the problems a 
large business faces is how to organize for these new 
businesses. The big company has tremendous advan- 
tages in terms of skill and resources, production, en- 
gineering, money, plant facilities, market research, 
et cetera, et cetera. However, when it gets into this 
stage, we in this country run into anti-trust difficul- 
ties from time to time. 

The Innovative Process in the Small Company 
Environment 

Let us look at the small company — as shown in 
Chart 10, because it has a really different problem. 
This generally starts out with an idea, and the idea 
is usually a technical idea and it's usually an idea by 
a rugged individualist who has very little business 
experience but who has a total commitment to the 
fact that his idea is going to revolutionize the world. 

Our economy is filled, incidentally, with examples 
of men like this who created businesses where, had 
they existed in the large company, their idea would 
never have succeeded because our various planning 
and analytical techniques might have crushed the vi- 
tality of their ideas. And I think we all recognize the 
enormous contribution they make. 

When I say the words "total commitment," I'm 
reminded of a story. In America at least, it's a very 
old one — perhaps our foreign visitors haven't heard 
it — about the pig and the chicken who were walking 
by the restaurant and they see ham and eggs adver- 
tised. The chicken suggests they go in, the pig says 



87 



no, no, no. He says for you it's a donation, but for 
me it's a total commitment. As we've interviewed 
these small companies, there's no question but 
there's total commitment in every sense of the word. 

Now the kind of problems they run into when 
they seek money are the problems of how they ex- 
plain to a hard-headed businessman or a financial 
person an idea that is very vague at best, and usual- 
ly highly technical. One of the problems, which we 
will talk more about later, is that in the financial 
community there are very few men who are as com- 
fortable with masers and lasers and quasers, and so 
forth, as they are with convertible debentures. 
Therefore, they have the important problem of 
finding people who can understand what they are 
talking about. 

If they get this initial venture money — and it's 
very high risk money because many of these busi- 
nesses fail — they then can go into the garage opera- 
tion. We are talking here about a small business, 
less than five million, usually fifty to a hundred em- 
ployees. They do not have a serious marketing prob- 
lem because they often know most of their cus- 
tomers intimately. Often the government is 
supporting this kind of activity. It's usually custom 
manufacturing, it's really not high volume manufac- 
turing. 

But as they move from this stage now into the 
second stage where it gets to be a good size business 
and where there's more than five hundred people 
and where you can no longer know your customers, 
except in an impersonal sense, the problem starts 
shifting. And many of these small companies who 
are dealing with innovation start having serious 
problems in this particular stage. Why? They don't 
have experience in control technique. They don't 
know how to get a product from a custom manufac- 
turing stage into a high-volume manufacture, and all 
that this requires in terms of processes and 
drawings, et cetera. 

Financial controls, they haven't had to worry 
about before. Marketing, they really haven't had to 
worry about. So in this stage a very critical stage is 
reached where management, or lack of management, 
often becomes the decisive factor as to whether this 
business is going to become a Texas Instruments or 
whether it's going to remain a small business. If they 
can get out into this stage they have other problems. 
In this country we, of course, get into all sorts of 
questions which we review in our report. These deal 
with mergers and "escaping" and making your mon- 
ey, as well as anti-trust problems. 



Some Findings and Some Proposals for Improv- 
ing the Environment 

Our panel had many recommendations and I'm 
just going to review a few of them. I would like to 
say that while we looked at tax incentives in this 
country, we could not convince ourselves that major 
tax incentives were really the way to foster innova- 
tion. The most frequently mentioned proposal of all 
is that instead of a fifty percent tax deduction on 
research and development we have a seventy-five 
percent tax deduction or tax credit, depending on 
how you look at it. 

To give you an idea of numbers, this would cost 
the government, in terms of lost revenue, about a 
billion and a half dollars a year. And because over 
ninety percent of the research and development in 
this country is performed by large companies, most 
of this money would go to large companies. As we 
looked at the enormous demands for federal reve- 
nues, we decided that from a cost-benefit standpoint, 
to use a popular word, it was a little difficult for us 
to justify this kind of tax loss. 

So we had a set of proposals that largely dealt 
with the small companies, because we felt the lever- 
age per dollar was higher there. For example, if you 
equalize the tax treatment of profits and losses of 
large and small technically oriented companies, the 
life cycle of the small company is such that often 
they are losing money for at least five years. If you 
happen to be a company like duPont or General 
Motors or Union Carbide or Bell & Howell or Xer- 
ox or a company of this sort, you obviously take 
your innovation losses and write them off imme- 
diately. These, i.e., the small technically oriented 
companies, companies not only cannot write them 
off immediately but because of the five-year-loss 
carry-forward, they often lose the carry-forward. So 
we had a provision here that did something about 
this by suggesting that for these categories of com- 
panies the tax loss carry-forward, at the very least, 
be extended to ten years. 

We had other kinds of provisions. I emphasize to 
you that if these companies are going to become big 
companies they need to attract management, which 
often they don't have. How do they attract manage- 
ment that is skilled in high volume marketing and 
manufacturing? Obviously, they attract it from the 
large companies. 

In 1964, in this country, there were major revi- 
sions of our stock-option arrangement, as some of 
you know (Chart 11). The purchase price of the 
stock went from eighty-five percent of market value 



up to a hundred. The period of option exercise went 
from ten years to five years. The life cycle of these 
companies, of course, makes this a difficult but very 
important problem, because the stock of these small 
companies is normally not nearly as liquid or con- 
vertible as is that of the larger company. Also in 
1964, the holding time was extended from six 
months to three years. We've convinced ourselves, 
at least, that if we really want to help these small 
companies, we should go back to a more liberal 
stock option plan for these categories of companies. 

Another specific proposal had to do with capital 
gains treatment to professional inventors. We have 
laws in this country that say, in effect, unless the 
inventor sells all of his patent he will not get capital- 
gains treatment for it. But this presents a serious 
problem. Many of you in this room are in business 
and you know that if an inventor walks in with what 
may be a promising idea, there are, at its early 
stages many questions, many ambiguities, many un- 
certainties about whether the idea is worth pursuing. 
From the standpoint of the inventor, if he has to sell 
it all in order to get this capital gain treatment, ob- 
viously, many of these transactions don't get made; 
many of the inventions do not get put into the flow 
in the market place. 

So we had some suggestions about that. But I 
think the real point of our findings had nothing to 
do really with specific tax proposals. Our over-all 
findings really had to do with the fact that in this 
country, at least, we have made great progress in 
certain segments of technology; but by and large 
there's not sufficient understanding at government, 
university, business and banking levels of this funda- 
mentally new process. 

Many of our recommendations dealt with the 
education-attitude-communication side. For exam- 
ple, at the Federal Government level, we pointed 
out that there's really no federal spokesman — no- 
body that's concerned with the generation of new 
technological business. For example, we have the 
"Small Business Administration." By statute it can't 
possibly deal effectively with high-risk capital re- 
quirements of these technological firms. As we inter- 
viewed people in various departments of the govern- 
ment, we did not really find an understanding of the 
unique problems that these small technological busi- 
nesses had. 

As another study of a governmental problem in 
our country, we decided it would be interesting to 
write down all the government agencies that are re- 
sponsible for policies that involve competition 



(Chart 12). As the panel studied this, it became 
very clear that there were a number of government 
regulatory policies that, when one really analyzed 
them, were anti-innovative, anti-competitive, in 
terms of their effect. 

What are some of the reasons for this? Well, one 
of the reasons for this, quite bluntly and frankly, is 
that many of our regulatory and anti-trust agencies 
in this country tend to be staffed by legally oriented 
people, not by people who understand economic 
forces and, particularly, technological forces. Among 
a number of recommendations that we made in this 
area one was to seriously look at the possibility of 
putting men in our various bureaus and departments 
and agencies who have a genuine feel, a genuine 
appreciation, of technology and the innovative 
thrust in this country. 

The Environment for Innovation 

In some ways our most important conclusion has 
to do with how we get these ideas in small busi- 
nesses into the market place. Why is it that Boston, 
for example, spawns so many of these businesses? 
Let me now tell you of a little study that was made 
of Philadelphia versus Boston, in which interviews 
were made of companies of this new type that had 
been founded there recently. For example, thirteen 
company founders were interviewed — seven in Phil- 
adelphia and six in Boston. 

One of the questions asked was the role that local 
universities played in stimulating them to form a 
business. Obviously this is not a large sample; but in 
Philadelphia, of seven such firms interviewed, seven 
said the university played a small role. In Boston 
where six were interviewed — and keep in mind that 
Boston has many more of this kind of firms than 
Philadelphia — all six indicated that the university 
played an important role. You know, of course, that 
M.I.T. is one of the important universities that plays 
a role in Boston. 

What about banks? They were asked, "What role 
did the local banks have with regard to helping you 
to get your business started?" Once again in Phila- 
delphia (and, incidentally, I think the figures in Chi- 
cago would be very similar to these) seven out of 
seven people, i.e., the entrepreneurs, who founded 
the business, said the attitude of the banks was poor 
or bad. But in Boston, five out of five said it was 
good or excellent. 

We became so intrigued with this phenomenon 
that I took about fifteen of our own executives in 
our company to Boston to try to understand this 



89 



environment that is apparently much more favorable 
and stimulating to technological businesses. In the 
banking community in Boston you will find at least 
two major venture capital firms who specialize in 
getting technology businesses started. There are no 
such firms in Chicago and many other cities. In Bos- 
ton we interviewed leading banks who had set up 
departments to deal with the unique problems of 
high technology business. You don't normally find 
these in other cities. 

So what we have tried to do is to define this envi- 
ronment that seems to spawn and nurture and create 
these businesses. One aspect of the environment that 
is terribly important is banks or venture capital 
sources, who are at home with technically oriented 
businesses, who make it their job to understand 
what these fellows are talking about, who have busi- 
ness appraisal capabilities to diagnose the risks and 
who know whom to call in a certain field if they 
have uncertainty about it. 

Another is the presence of technically oriented 
universities who are genuinely sympathetic and 
firmly believe that helping these businesses get start- 
ed is an important contribution they have to make. I 
suspect that many of our universities feel that it is 
not an appropriate role for a university to really en- 
gage in an activity that's this closely related to com- 
merce. I can only indicate to you that in Boston, at 
least, it's a dynamic force that has helped Boston 
recover from what could have been a disastrous loss 
following the removal of the textile and leather busi- 
nesses from the Boston area. 

A third aspect of the environment is the entrepre- 
neur and we said in our report that entrepreneurship 
breeds entrepreneurship. Put yourself in this situa- 
tion. You're a young man who has an idea, you're 
committed to it and you're trying to find out 
whether to start a business with this idea. I submit 
to you that if there are a few multi-millionaires in 
the community that have been successful in doing 
this, you're not going to be discouraged by that fact. 
And it's important to have these successful men. 

In the environment we see people whom we call 
marriage brokers, who know how to find people for 
these small companies. How to get them manage- 
ment. How to help them get money at the right time 
if that's what they need. And, very important, com- 
munication. In the Boston area for example — this is 
also true of a few other areas — it is clear that there's 
a lot of talk back and forth between universities, 
banks, marriage brokers, small companies et cetera. 
We don't find this in many other communities in the 
country. 



What have we concluded about innovation in 
terms of the government's role? Perhaps its most im- 
portant role is to assume the leadership in getting 
this environment set up in the business community 
and in the local communities where bankers, busi- 
nessmen, universities, technologists, et cetera, are 
working together to get these businesses formed. 
One of our important recommendations is to have a 
top conference in Washington, and then set up re- 
gional conferences in every major city of the United 
States, to get this innovation mechanism going. 

Some Thoughts About the Future Environment 
for Innovation 

What does this mean to businessmen? In the first 
place, we've had the model in this country that there 
are big companies and little companies, and the big 
companies get at the technology of the little com- 
panies by swallowing them up or acquiring them. 
I'm not so sure that's the only model, and I would 
guess — from my study of these small companies — 
we're going to see some new creative relationships 
emerge over the next five to ten years — creative re- 
lationships which will maintain the enthusiasm and 
independence of these small companies and yet add 
to them the skills and resources of the large com- 
panies. 

I suspect our anti-trust people will have to do 
some serious rethinking about the conglomerate en- 
terprise concept that they have found offensive. It 
could be argued that combinations of these small 
companies might be one of the best things that 
could happen to this country if we're seriously con- 
cerned with innovation and getting it started. 

What I've really been talking about is a revolu- 
tion that has been taking place in the world since 
the time primitive man first invented that wheel. I 
have a little story here that I hope makes a point. It 
is set in the primitive era, and features the sales 
manager of several hundred thousand years ago. 

The sales manager says, "Oonka" — he's talking to 
his market researcher — "We've been getting com- 
plaints about our heavy goods transporter." 

Oonka, who is the market research man, as usual, 
is very well prepared and has his statistics in fine 
order. He says, "I can tell you exactly why. 48.3% 
think that the runners are too bumpy and lumpy and 
39.2% say that the tow-rope keeps breaking." 

"Well, that's simple enough," says the sales man- 
ager. "We're going to put research and development 
to work and what they're going to do is to develop 
smoother runners and stronger tow ropes." 

The market researcher reflects awhile and he 



90 



says, "Gee, that's all well and good, but what if, for 
instance, R&D came up with something spectacular, 
like a wheel?" 

The sales manager looks incredulous and says, 
"What's a wheel?" 

Oonka says, "I don't know, the word just came to 
me." 

This apocryphal story is designed to make a 
point. In some circles in this country, at least, we 
have believed too seriously some of the literature 
about the marketing concept, in which, translated 
literally, somebody goes out and finds out what peo- 
ple want and the research people are instructed to 
carry out certain assignments. The real need these 
days is to have businessmen and men of affairs who 
are what I call bilingual; who speak the language of 
the market place on the one hand and the laborato- 
ry on the other. 

A study was done recently of the six hundred sen- 
ior officers of America's largest corporations: nearly 
forty percent had technical degrees. A study of the 
pool of executives from which the next generation's 
senior executives are going to come, men between 
thirty-five and forty-five, over half have technical 
degrees. One of the adjustments we must make in 
American management, and I suspect all over the 
world, is to get managers who have this bilingual 
quality. Because if we're illiterate as far as technolo- 
gy is concerned, we're going to be functional illiter- 
ates of a rather serious kind. I say this with real 
feeling. Incidentally, Dr. Hollomon was quite kind 
in not telling you that I spent about a year-and-a- 
half at M.I.T. One of the reasons it wasn't longer 
was that I have the unique distinction of having 
made the lowest mechanical perception score in the 
history of the school. 

So, 1 say this with deep feeling, the need is for 
men who can understand what is going on in the 
laboratory. In one of the businesses that we are in- 
volved in, photography, we see an example of this 
type of person — that person is Dr. Edwin Land of 
Polaroid. This is a man who combines imaginatively 
what is technically possible with what is commer- 
cially feasible. He works at the frontier of science 
and yet he has a feeling of what people want. One 
of his great successes recently is a little camera 
called "The Swinger," and he's the kind of man who 
can say, "What we now need is a $19.95 Polaroid 
camera with a name that swings." We can't build a 
concept around a man like Dr. Land, but this kind 
of bilingual communication, if you will, has to take 
place. 



Many of you, I know, are technical people, and 
one way of putting it is that we need an impedance 
match between the laboratory and market place, be- 
cause too many of the signals, frankly, are getting 
lost and I think that if you talk to many, many sen- 
ior executives in America, they're not concerned so 
much with the amount they're spending on research 
and development as they are with its productivity 
and what they're getting out of it. And they're con- 
cerned with the lack of an impedance match, the 
loss of signals. 

It is my feeling that the creation of these new 
businesses that we've been talking about is not only 
essential to the problem of growth in a technological 
society, but it's one of the most torturous, exciting, 
difficult jobs that American industry faces and we 
just can't settle for having less than the best men 
devote themselves to what I've been talking about. 

Many of us, I'm afraid, get to be prisoners of our 
environment. Marshall McLuhan was here yester- 
day. You know he talks about how we don't see the 
environment we're in. The comment he made that I 
think best captures this notion is, "I don't know who 
discovered water but I'm sure it wasn't a fish." The 
point, of course, being that we can't have men that 
are isolated from the rest of the world. 

We often talk about the ivory tower and it has 
occurred to me that many of us in business and in 
government can become so isolated in our occupa- 
tion and in our own technologies that we live in an 
ivory tower that is far more remote than the ivory 
tower of the academic person. And part of the shift 
that we're going to need if we're really going to 
make use of this R&D is to have businessmen, if I 
can use the phrase, who cross-pollinate. Business- 
men who cross-pollinate with the non-suburban 
community, the academic community, the young 
community but, increasingly, the scientific communi- 
ty. And here I suspect, gentlemen, time is our en- 
emy. Most of us — at least my day is like this — 
spend so much of our working day on monumental 
trivialities which bear only the dimmest relationship 
to what we're really paid to do, that by the time we 
extricate ourselves and get down to the business at 
hand, we're commonly too tired to cross-pollinate 
with anyone. 

I will end where I began. We are on a tightrope 
in this technological age, and we are walking on the 
tightrope across the exciting technological Niagara. 
The real question before the house is, "Can we stay 
on top and know where we're going?" We must. We 
can, and I think we will! 



256-707 0-67— 7 



91 



CHART 1 



-& 



TYPICAL DISTRIBUTION OF COSTS IN SUCCESSFUL 
PRODUCT INNOVATIONS 



Research — 

Advanced Development - 

Basic Invention 



Engineering and 
Designing The Product 



Tooling — 

Manufacturing Engineering 

(Getting Ready for Manufacture) 



Manufacturing 
Start-up Expenses 



Marketing 
Start-up Expenses 



Percent 



5-10% 



10-20% 



5-15% 



10-25% 



40-60% 



10 



20 30 



40 



50 60 70 80 



CHART 2 



ECONOMIC EFFECTS OF ONLY THREE 
TECHNOLOGICAL INDUSTRIES OUT OF MANY 





In 1945, the TELEVISION, JET TRAVEL, and DIGITAL COMPUTER 
industries were commercially non-existent. 

In 1965, these industries contributed more than $ 13 BILLION 
to our GNP and an estimated 900,000 jobs . . . and 
very important, affected the QUALITY of our lives. 



92 



CHART 3 



A FEW EXAMPLES OF TECHNOLOGICALLY INNOVATIVE 

COMPANIES THAT HAVE EXPERIENCED MUCH OF THEIR 

GROWTH IN THE LAST 20 YEARS (1945-1965) 

AVG. % ANNUAL GROWTH (Compounded) 





Net Sales 


Jobs 


Polaroid 

m '"• M 1 1 ■ : 1 ' . 


13.4% 


7.5% 








3M 


14.9% 


7.8% 








IBM 


17.5% 


12.1% 








Xerox 

(Haloid Co.) 


22.5% 


17.8% 








Texas Instruments 

(1947-1965) 


28.9% 


10.0% 



Average % annual sales growth of above companies*: 16.8% 
Average % annual growth of GNP: 2.5% 



'Excluding Texas Instruments for which data are available only for the past 18 years. 



CHART 4 



INNOVATION AND INTERNATIONAL TRADE 

An Example: U.S. Exports of Yarns & Fabrics 
Synthetics (High Technology) 
Cotton & Wool (Low Technology) 



EXPORTS 1956 



$187 Million 



$158 Million 



Source: U.S. Department of Commerce. 



COTTON -WOOL 



SYNTHETICS 



EXPORTS 1965 



$125 Million 



$241 Million 



93 



CHART 5 



VARIATIONS IN COMPANY- FINANCED R&D 
AS A PER CENT OF NET SALES, BY INDUSTRY 



■ 



Steel 

(Primary ferrous products) 



Transportation Equipment 

(Excluding aircraft) 



Chemical 




Drugs 

Source: NSF (1966) — Figures are for 1964. 



Net Sales 
(Billions) 


R&D 
(Billions) 


R&D 
Net Sales 


17.8 


0.111 


0.6% 


34.3 


0.865 


2.5% 


25.6 


0.830 


3.2% 


5.03 


0.224 


4.5% 



CHART 6 



VARIATIONS IN R & D, BY SIZE OF COMPANY 



Percent Distribution of R & D 
Performing Companies 



Percent Distribution of R & D 
Expenditures 



100 



80 



60 



40 



20 



5,000 of More Employees ^ 




100 




^ 1,000 to 4,999 Employees 
ess Than 1,000 Employees 



Source: Basic research, applied research, and development in industry, 1962, 
NSF 65-18, 1965. 



94 



CHART 7 



SOME IMPORTANT INVENTIVE CONTRIBUTIONS OF 

INDEPENDENT INVENTORS 

AND SMALL ORGANIZATIONS IN THE TWENTIETH CENTURY 



Xerography 

Chester Carlson 

DDT 

J. R. Geigy & Co. 

Insulin 

Frederick Banting 

Vacuum Tube 

Lee De Forest 

Rockets 

Robert Goddard 

Streptomycin 

Selman Waksman 

Penicillin 

Alexander Fleming 

Titanium 

W. J. Kroll 

Shell Molding 

Johannes Croning 

Cyclotron 

Ernest 0. Lawrence 

Cotton Picker 

John & Mack Rust 



Shrink-proof Knitted Wear 

Richard Walton 

Dacron Polyester Fiber "Terylene" 

J. R. Whinfield/J. T. Dickson 

Catalytic Cracking of Petroleum 

Eugene Houdry 

Zipper 

Whitcomb Judson/ Gideon Sundback 

Automatic Transmissions 

H. F. Hobbs 

Gyrocompass 

A. Kaempfe/E. A. Sperry/S. G. Brown 

Jet Engine 

Frank Whittle/ Hans Von Ohain 

Frequency Modulation Radio 

Edwin Armstrong 

Self-Winding Wristwatch 

John Harwood 

Continuous Hot-Strip Rolling of Steel 

John B. Tytus 

Helicopter 

Juan De La Cierva/Heinrich Focke/ 
Igor Sikorsky 



Mercury Dry Cell 

Samuel Ruben 

Power Steering 

Francis Davis 

Kodachrome 

L. Mannes & L. Godowsky Jr. 

Air Conditioning 

Willis Carrier 

Polaroid Camera 

Edwin Land 

Heterodyne Radio 

Reginald Fessenden 

Ball-Point Pen 

Ladislao & Georg Biro 

Cellophane 

Jacques Brandenberger 

Tungsten Carbide 

Karl Schroeter 

Bakelite 

Leo Baekeland 

Oxygen Steelmaking Process 

C. V. Schwarz/J. Miles/ 
R. Durrer 



CHART 8 



GROWTH PROBLEM IN A SUCCESSFUL LARGE COMPANY 

(Hypothetical Case) 



Annual Sales 

Sales Decline (Oldest Products). 
Price Erosion 



Typical Market Penetration. 
Growth Target 



_ $1,000,000, 000 

_ 5% Per Year 

_2% Per Year 

_25% 

_10% Per Year 



$70,000,000 

$100,000,000 
$170,000,000 

Such a company needs $170,000,000 of new sales from a combination of 

(a) established products 

(b) new products in established businesses 

(c) new businesses 

Ultimately this company must seek to enter completely 
new businesses or abandon its growth objective 




95 



CHART 9 



CHART 10 



MANAGING TECHNOLOGICAL INNOVATION 

LARGE COMPANY ENVIRONMENT 



MANAGING TECHNOLOGICAL INNOVATION 

SMALL COMPANY ENVIRONMENT 



CHARACTERISTICS 



PROBLEMS 



CHARACTERISTICS 



PROBLEMS 



Venture analysis 

Directional planning 

Business objectives 

control 



BUSINESS 
PLANNING 



Complex enterprise 

Has R/D organization 

May lack certain 

technical skills 



EXPERIMENTAL 
APPRAISAL 



Outside inputs needed 

Incentives available 

Continuing R&D effort 



EMBRYO 
BUSINESS 



Growth 

Jobs 

Products 



SUCCESSFUL 

GROWTH 

BUSINESS 



Not invented here 

Time value of money 

Inbreeding 

Lack of specific market 

experience often kills 

good projects 



IDEA 



Individualists 

Technical 

Uncertainty 

No business experience 

Total commitment 



MONEY 



High risk requires 

high potential return 

Relatively small $ 

No technical experience 



Know-it-alls 
Risk vs. Cost 
emphasized 
Extend present 
businesses 



Failure to meet return on 

investment criteria in 

early years 

Antitrust 

Key management 



"GARAGE" 
OPERATIONS 



Losing money 
Less than 

• 100 employees 

■ $1 million capital 

■ 5 years old 
Technology oriented 

High ratio technical men 
Government contracts 

Fast reaction time 
One or few customers 
Custom manufacture 

High return on investment 
High value added 



2nd STAGE 
BUSINESS 



Assimilation 
Antitrust 



New kind of financing 
Dilution of equity 

Many impersonal customers 

Product oriented 
High volume manufacture 
More than 

• 100 employees 

• $1 million capital 

• 5 years old 



SUCCESSFUL 

GROWTH 

BUSINESS 



Growth 

Jobs 
Products 



Capital? 

In business? 






Appraisal a 

Lack of understanding 5 

• Banks § 

• Industry < 

• Government </> 

• Universities £ 



Key management 

Incentives 

Fringe benefits 

Government procurement 

Total commitment 



Key functional staff 

Control techniques 

Market analysis 

World wide marketing 

Costs 

Competition 



Escape 
Merger 
Sell out 
Antitrust 
Timing 






96 






_. 



chart 11 w^^^m^m^mm^mm^mM^ma^^mmmmmmm^mma^ 

SOME OF THE MAJOR 1964 REVISIONS OF STOCK OPTION 
PLANS ENTITLED TO CAPITAL GAINS TREATMENT 





Before 1964 


After 1964 


Minimum Purchase 
Price of Stock 


85% 

of 

Market Value 


100% 

of 

Market Value 


Maximum Time 

to Exercise 

Option 


10 Years 


5 Years 


Minimum Holding 

Time Between Purchase 

and Disposition of 

Stock 


6 Months 


3 Years 



CHART 12 



Board of Governors of 
the Federal Reserve 
Dept. olericulture System Federa| ^.^ 

Dept. of Interior \ \ \ /Commission 




Dept. of Justice 



Dept. of Treasury 

Atomic Energy 
Commis: 

Civil 

Aeronaut! 
Board 

Comptroller 
of the Currency 



Federal Communications 
Commission 



Federal Deposit Insurance Corp 




^COMPETITION 



' Federal! 
Trade 
Commission 



United States 
Tariff Commission 

Small Business 
Administration 



Securities and 
- -Exchange 
Commission 

Interstate 

Commerce 

Commission 

eneral Services 
Administration 



Food and Drug 
Administration 

Federal 

Power Commission 



97 



Dr. Hollomon: I'd like to introduce next, Professor 
James Brian Quinn of Dartmouth College for a dis- 
cussion on these presentations. He has written much 
about the processes of research and development, 
their use and their management. 



Professor Quinn: After the excellent statements by 
the Vice President last night, Dr. Hornig, and my 
two colleagues this morning, what should one add? I 
shall only touch on a few issues which I consider 
most important and highlight significant points al- 
ready made. 

There are some basic philosophical points which 
need emphasis in any discussion of government poli- 
cy for technology. 

The Nature of Technology 

The most important of these is the nature of tech- 
nology itself. Technology is knowledge . . . knowl- 
edge about physical relationships systematically ap- 
plied to useful purposes. Its manifestation, hardware 
— which many consider technology — may or may 
not be technology. A crude lathe in the hands of a 
skilled man can represent a sophisticated tech- 
nological system. But the most advanced computer 
in the hands of a savage jungle tribe is likely to 
simply be a rapidly rusting hunk of junk. 

Thus when we talk of policies for technological 
development, we must think in terms of policies 
for essentially intellectual processes. This is some- 
thing of a new concept for national policy makers 
and for all managers. The concept should include 
policies to stimulate both: 

( 1 ) The creation of knowledge for practical pur- 
poses, and 

(2) The use and transfer of knowledge for prac- 
tical purposes. 

Within this context national policies for technolo- 
gy should include guidelines for the development, 
use, and dissemination of "management tech- 
nologies" which — like operating research techniques 
— deal with optimal relationships between physical 
entities. Yet such technologies have rarely been dis- 
cussed as a significant component of national tech- 



nological policies. I believe this is a serious over- 
sight. 

To date, the European focus — and often that of 
the lesser developed countries — has been largely on 
how to create new technologies, preferably those 
based on frontier discoveries in the physical 
sciences. Mr. Major wisely did not limit his focus to 
this point. He recognized that the far larger question 
for Europe, the United States, and most of the world 
is how to intelligently use and transfer technological 
knowledge we already are capable of creating. In 
fact, for most of the underdeveloped and even de- 
veloping countries, the foremost question should be 
how to create and adapt those relatively low-level 
technologies which could most easily relieve their 
people from needless unproductive routines and 
vastly multiply their real wealth, health, and capital 
formation potentialities. 

With these philosophical views in mind, let us 
look at some of the more significant questions of 
government policy as they affect technological devel- 
opment. While I shall use the United States govern- 
ment apparatus as a focal point for my comments, 
the same general questions would exist for many na- 
tions. 

The Public Interest vs. Economic Growth 

At the heart of our discussion should be the ques- 
tion: How can the Government stimulate the crea- 
tion, use, and transfer of technological knowledge in 
the "public interest," not just toward economic 
growth in the usual sense of an ever higher Gross 
National Product? Clean air, purified water, or 
higher levels of health may very well not mean as 
much economic growth as the use of similar re- 
sources in other ways. But such uses may be 
infinitely more important to the society than the im- 
plied loss in "economic growth." When we avoid the 
simplistic use of "economic growth" as the sole cri- 
terion for advance, this leads us to some most com- 
plex questions. What is the public interest? Who 
defines it? Should we consider a single cohesive 
"science policy" to support these goals, even if they 
can be defined? Or, should we really think only in 
terms of policies (plural) for science and technolo- 

gy? 

Personally, I think, both. I feel that pluralism in 
approach offers great strengths for a technological 
society. The vying of individual minds and ap- 
proaches — both within the government and in the 
private sector — to establish social goals and to solve 
society's problems, is among the greatest of all stim- 
uli to the creation and use of technology. 



98 




JAMES BRIAN QUINN [ s Professor at the Amos Tuck School of Business Ad- 
ministration at Dartmouth College, and a consultant in Long-Range Planning and 
Research Management to major United States and foreign companies. Formerly 
Assistant Dean at the Tuck School and Assistant Professor at the University of 
Connecticut, Professor Quinn has been a consultant to the U.S. Department of 
Defense and the U.S. Treasury Department. He was a staff Consultant on Science 
Policy to the Select Committee on Scientific Research (Elliott Committee). 

Professor Quinn received a Bachelor of Science Degree in Engineering from 
Yale University, followed by a Master- of Business Administration in Management 
from Harvard University. His Ph.D. in Economics was conferred by Columbia 
University. 

Professor Quinn's writing have been extensive, with emphasis on the planning, 
budgeting and control of research, and the transfer of the results of research to 
operations at both corporate and national levels. 



But even pluralism can go too far. Some choices 
must be made by any responsible government in the 
interests of social efficiency and effectiveness. Gov- 
ernment must avoid excess duplication of expensive 
programs. It must avoid undue conflicts in the pur- 
poses of related programs. It should avoid overem- 
phasis on one technology at the expense of others 
which may be more important to the achievement of 
total social goals. It must choose where to invest 
when private investment mechanisms are inadequate 
for social purposes. Typically, as the primary sup- 
porter of a nation's R&D activities — and as pur- 
chaser of a large portion of a nation's Gross Nation- 
al Product — the government is a prime determinant 
of the balance toward which the society will direct 
its technological resources. Through its allocation 
mechanisms it establishes to a large extent which 
technologies will receive major emphasis, which will 
be stimulated to a lesser degree, which will be left to 
thrive under individual initiative and support, and 
which "big science" areas may be purposely ignored. 
For no single nation — not even the United States — 
can solve all the technological problems of mankind 
at once. 

This hard fact leaves the U.S. — and all other ad- 
vanced nations — with many difficult choices in poli- 
cy. How much should the government spend in total 
on the development amd dissemination of tech- 
nological knowledge as opposed to the private sec- 
tor? How far can the government's decision making 
structure allow redundancy or competition? In what 
areas is it most important to set forth strict rules for 
action or general guidelines for choices? How can 
one hope to predict the ultimate impact of any given 
policy as its effects diffuse through the society? How 
can we even measure its effect after the fact in a 
complex social system? 

Levels of Technology 

Whether systematically or intuitively, govern- 
ments must inevitably formulate policies for tech- 
nological development. Whether they are formulated 
with a full sense of the complexity of a technological 
culture is another matter. Too often government 
policy for technology could better be called "policies 
for science and the advanced technologies." The 
effective "level of technology" in a society depends 
not just on its capacity to participate in certain ad- 
vanced scientific areas — or even to "reduce-to-prac- 
tice" first. Quite to the contrary, its true level of 
technology will depend to a much greater extent 
upon its ability to use relatively low degree tech- 



nological knowledge in the routine production, dis- 
tribution, and service industries, which are necessary 
to back up more advanced technological fields and 
which typically provide the bulk of its Gross Nation- 
al Product.* 

The effects of many simple technologies, when 
multiplied through a whole society, may be 
significantly larger than the impact of a few more 
advanced technological capacities. For example, the 
prevalence of basic "work simplification" and 
"efficiency" concepts and attitudes everywhere in the 
United States may well be more important to its in- 
ternational competitive posture than even its most 
glamorous modern technologies. Thus, technological 
policy must consider not just the interests of science 
and the advanced technical areas, but the balance of 
technological knowledge which the whole society 
needs. 

How can government policy stimulate the contin- 
uous development of both high and low level tech- 
nological knowledge on a broad base in the society? 
More important for many countries, what policies 
can help induce good people to go into the less 
glamorous fields of technology — like highways, ur- 
ban development, building trades, and so forth — 
where the ultimate payoff to the society may be 
much higher than investing the same skilled re- 
sources in advanced fields like nuclear power or 
computer technologies? These are problems which 
plague all the advanced western countries I have 
contacted in my international studies. 

The Policy Formulation Process 

How does a government exercise its role in na- 
tional policy making for technological development? 
Here we should recognize clearly an often over- 
looked aspect of the policy-making process itself. 
National policy is rarely created finally by a "Ser- 
mon on the Mount" by a policy making executive. 
Even the excellent statements of the Vice President 
last night will not become policy until the apparatus 
of government acts on them in a consistent fashion. 
Government policy — as industry policy — derives 
from a complex interaction of many forces. These 
include, certainly, the statements of general guidance 
provided by top government officials. But they also 
include the recommendations and ego-involvements 
of people proposing programs and approaches at 
lower levels in government agencies. The project se- 



* As a case in point; Communistic China has advanced nuclear and 
missile weapons capacities, but the limited availability of consider- 
ably lower levels of technology in her agriculture, transportation, 
distribution, and construction fields apparently constrains her per 
capita wealth to minimal levels. 



100 



lection and priority setting systems of each agency in 
essence formulate policy, as do the actions of inter- 
bureau budgetary and coordination groups (like the 
Bureau of the Budget or Office of Science and Tech- 
nology in the United States) at the highest adminis- 
trative levels of government. In many countries, the 
fiscal and political decisions of their legislatures are 
as important in policy formulation as the highly so- 
phisticated analytical and organizational apparatus 
of their Administrative or Executive cadres. In fact, 
in the United States the Congress — through its fiscal 
controls and oversight activities — is perhaps the ulti- 
mate source of policy in many areas affecting 
science and technology. Yet its fragmented commit- 
tee organization and review procedures practically 
insure non-cohesive policies in the government sec- 
tor and an uncoordinated impact of government ac- 
tivities on the private sector. The complexity of the 
decision making apparatus in free countries thus 
militates against formulation of a truly integrated 
policy. 

But even if all of these forces did interact to for- 
mulate a cohesive policy, there would still be the 
question of getting the government's far flung ap- 
paratus to follow that policy. 

For example: in the early stages of World War II, 
the central British Government bureaucracy may not 
have wished to emphasize radar research, but techni- 
cal teams in the Government and the scientific com- 
munity generally saw to it that the official policy was 
not followed. There are many other examples of 
similar failures in implementation. Some of these 
failures are healthy, some not. 

Thus, as we talk of government policy formula- 
tion, we must think of the entire complex planning, 
evaluation, and control structure of the government 
and how it could conceive of and implement desired 
policies. It is ultimately this structure which allows 
decentralization in government, maintains pluralism 
in the government sector, and through its interac- 
tions determines the government's share of the 
"public interest" — yet does not imply omniscience 
or direction by any single group or individual. 

Mechanisms to Exert Policy 

In addition policies for the creation and utiliza- 
tion of technology in a non-totalitarian society result 
from an even broader-scale interaction among gov- 
ernment activities and other social forces outside the 
direct pale of government. The primary role of gov- 
ernment is to balance the impact of these forces, 
stimulating some and suppressing others in the pub- 
lic interest. It exerts its role as a balancer in a varie- 



ty of ways, and policy questions are associated with 
each of the mechanisms through which the govern- 
ment typically directs its influence. 

This morning Dr. Hornig touched upon several of 
the most important ways in which the government 
extends its role as a policy formulator into the pri- 
vate sphere. He mentioned the government's role as 
a buyer of technology. This role raises many impor- 
tant questions. How can the government insure a 
favorably balanced impact on the society from its 
many decentralized buying functions? How can con- 
sistent and beneficial priorities be set within mission- 
oriented departments, between mission-oriented de- 
partments, and for new social needs not presently or 
exclusively within the defined missions of existing 
government departments? How can government de- 
velop its functions as purchaser of items desired by 
the public — yet too complex or costly to be bought 
by individuals or localities — without infringing un- 
duly upon the personal freedoms of its citizens? 

Other questions exist concerning the government's 
role as an investor in technological knowledge. How 
can the government balance its commitments for fu- 
ture needs against current necessities? How can its 
complex political and policy apparatus evaluate the 
relative worth of investments in general education, 
science, social sciences, or the humanities against 
added technological development? No accepted cri- 
teria even exist for weighing such alternatives. 
Neither are there adequate data nor analytical tech- 
niques for evaluating such questions. Until such cri- 
teria, data, and techniques do exist there can be no 
realistic alternative to pluralistic competition for re- 
sources. 

Still other questions result from the government's 
regulatory role. For example, how can government 
adequately estimate the impact of its economic, 
fiscal, and social policies on the development and 
utilization of technology in the national interest? 
How could the U.S. government have weighed the 
impact on its technological communities of its recent 
decisions on interest rates and the rescinding of 
depreciation credits against the other economic and 
social goals these policies sought? What role should 
government take in establishing physical standards 
for products and processes to obtain desirable con- 
sistency among local, regional, state, and private 
users? How can the government analyze and predict 
the impact of its rules, procedures, and practices — 
under contracts and in heavily regulated private sec- 
tors — on the technological capacities of those sec- 
tors? How can it obtain productive comparability 



101 



among regulations in competing or impinging sectors 
without imposing bureaucratic rigidities which inhib- 
it or prevent flexibility and change? 

Thus, the central question of government tech- 
nological policy is: How can a government achieve 
cohesiveness in the effects of its various policies on 
the total society without destroying the freedom and 
pluralism upon which the dynamism of that society 
often depends? But these are just the questions 
which exist at the government level in national poli- 
cy formulation. 

The Private Sector and National Policy 
Formulation 

In a free society the government does not deter- 
mine national policy alone. The decisions of private 
concerns and individuals are as important, if not 
more important, than government decisions in deter- 
mining the overall posture of the nation. Thus, ma- 
jor questions exist concerning the relationship in a 
free society between public vs. private choice and 
development and utilization of technology by the 
public vs. private sector. 

What role should the government play in the 
creation of new technology? Should it limit its sup- 
port to education and the support of basic science? 
Should it support development programs for items 
to be sold in the private sector? Should it create 
cooperative laboratories for lagging sectors? To 
what extent should the government participate in the 
actual production of technological goods and serv- 
ices in the United States? What policies can be for- 
mulated to differentiate the roles of the public and 
private sectors? If there is to be a "new partnership" 
between industry, education, and government — as 
many have suggested — what should be the terms of 
this partnership? These are basic policy questions, 
and I submit that we have neither good data nor 
good theory on which to base conclusions. Conse- 
quently, perhaps our only approach can be experi- 
mental. 

Further policy questions strongly affecting the pri- 
vate sector are these. What policies should govern- 
ment develop concerning the size of competing units 
within its borders? How can the economy benefit 
most from the production and marketing economies 
of scale offered by large size and the flexibility and 
freedom offered by smaller units? I feel that a 
country needs both giant and small companies for 
its continued healthy development. The question is 
how to develop policies which encourage rational 
development of both — and discriminate seriously 
against neither one form nor the other. 



Another most significant policy question for the 
private (business) sector is this. How can private 
producers be stimulated to further develop markets 
where group consumption is essential? How can tra- 
ditional business attitudes toward group consump- 
tion markets be changed? Can the benefits of private 
production be maintained when group consumption 
becomes essential? Since the problems of all socie- 
ties indicate that group consumption for health, edu- 
cation, de-pollution, transportation, urban develop- 
ment, and so forth will be increasingly essential if 
man is to improve the quality of his life, how can 
private and government attitudes towards these mar- 
kets be changed to develop the most effective rela- 
tionship between private production and public con- 
sumption? A most important development (in the 
U.S. and many western European countries) over 
recent years has been the constructive participation 
by businessmen in government policy formulating 
commissions, such as: our recent National Commis- 
sion on Technology, Automation, and Economic 
Progress; the Royal Commissions of Sweden; and 
the various planning committees in France. In all 
these countries there appears to be a changing atti- 
tude among businessmen toward "group consump- 
tion" as something apart from the dreaded "social- 
ism" it was identified as in the past. 

Labor's Role in National Policy 

Another private institution — organized labor — al- 
so largely determines any free nation's technological 
posture. Labor can encourage or virtually stop tech- 
nological change in specific sectors. To assist eco- 
nomic growth through technological advance, gov- 
ernment policy must help develop flexibility of 
movement, job adaptability, and acceptance of tech- 
nological change in the labor sector. The problem is 
how to accomplish this without infringing upon the 
freedom of laborers to choose their own futures and 
to work in favorable industrial relations environ- 
ments. 

There can be no question that technological de- 
velopment in the U.S. and Sweden (for example) 
has been vastly stimulated by these nations' high- 
wage levels and demand for excellent working con- 
ditions. How can such demands continue to be con- 
sidered acceptable points for collective bargaining 
while the restriction of new technologies is severely 
limited? How can employment and unemployment 
practices be restructured to obtain a higher utiliza- 
tion and motivation of the employable work force? 
Along with others, I am deeply concerned that the 



102 



administration of U.S. unemployment and welfare 
programs is often wasteful and can tend to impact 
unemployment, create unfortunate work attitudes, 
and increase social inertias — rather than relieving 
the problems they seek to solve. Yet the producing 
sector must shoulder the added burden of unneces- 
sary social overheads. What new forms of data and 
incentives are needed to keep able people actively 
and flexibly producing for the society while the truly 
handicapped receive the care they need? Again 
neither an adequate theory nor reliable data exist 
upon which to base firm conclusions. 

National Policy and International Affairs 

A final set of policy questions exists particularly 
for the United States in relationship to international 
affairs. As the dominant technological power of the 
Western World, the United States runs a risk of be- 
coming emotionally and politically cut off from the 
allies it needs throughout the world. Consequently, 
there is still another series of policy questions which 
our government must (almost uniquely) consider in 
relation to its international posture. 

To what extent should the United States encour- 
age or actually discourage the "brain drain" from 
foreign nations? Our policies to date have generally 
encouraged movements of key people from friendly 
nations to the United States. But there is some ques- 
tion as to whether these people could not contribute 
more to long term United States' and world interests 
by being stimulated to stay in their native countries. 
Certainly the United States cannot isolate those per- 
sons who wish to come to its shores to share the 
excitement of working with the most advanced 
thinkers in their fields and to use advanced equip- 
ment only available here. But to what extent should 
U.S. national policy encourage the sharing, exporta- 
tion, or use of technology abroad rather than 
domestically? What kinds of technological transfers 
are most effective to underdeveloped, developing, 
and relatively mature economies? If these differ, can 
the nation have one set of policies for one group of 
nations and another for others? 

Despite many statements that technology is a 
"world resource" just like scientific knowledge, there 
is a real question whether sharing technology freely 
would actually stimulate or retard world tech- 
nological development. Unlike scientific knowledge, 
which is generally sought for its own sake, technolo- 
gy is developed for its practical worth in specific 
applications. To distribute this value freely is to de- 
prive risk takers of some of the presumed benefits of 
their efforts. To what extent should a government 



force individuals who have developed technological 
knowledge through their private resources — or a 
public which has invested heavily to obtain such 
knowledge — to share benefits with others who have 
been unwilling or unable to make similar expendi- 
tures? The fundamental question is whether all so- 
cieties would tend to lose the important intellectual 
output of many private (or privately supported) in- 
ventors, if they were forced to share their tech- 
nological knowledge freely throughout the world? 

Finally, there is an entirely new private force in 
world technological affairs, the giant international 
technologically-based companies. Many of these 
now have greater technological and production ca- 
pacities than nations long considered sovereign in 
world affairs. There are major questions as to how 
the policies of parent and host countries should be 
adapted to maximize the world-wide effectiveness of 
these companies. To what extent can these com- 
panies be considered apolitical forces in the world 
affairs? To what extent are they to be regarded as 
logical extensions of their parent and/or host coun- 
tries' national technological policies? What kinds of 
policies are desirable at the parent country level? At 
the host country level? At the special treaty level? 
International law level? How can all interested 
forces work together to obtain maximum interna- 
tional benefit from these new sophisticated entities 
which can contribute so much to or distort the cul- 
tures they operate within? 

Conclusion 

These are national policy questions which affect 
the development and use of U.S. and free world 
technologies. They are the dominant issues of our 
times and must be faced in the best way we can 
while we develop better data and techniques to im- 
prove our decision processes. But a key step in mov- 
ing forward would be to recognize the complexity of 
the issues we face, the need for a thoroughly articu- 
lated science and technological policy apparatus 
throughout all elements of government, the critical 
relationships of the private business and labor sec- 
tors, and the new issues raised for all societies by 
the developing needs for group consumption and in- 
ternational exchange of technologies on a scale 
never before conceived. To solve these problems 
will require ( 1 ) new mechanisms of communication 
and cooperation among the three major sectors of 
labor, business, and government in each country, 
and (2) new concepts of how economic systems ac- 
tually operate and the role of technology in world 
affairs. 



103 



Dr. Hollomon: Thank you Professor Quinn. I would 
like now to introduce to you Professor V. K. R. V. 
Rao, member of the Planning Commission of the 
Government of India, a person who has participated 
in United Nations affairs, and an economist who is 
deeply interested and responsible for finding ways of 
applying technology in an emerging economy. 



Professor Rao: Mr. Chairman, I must begin by 
saying how very much I have enjoyed the edu- 
cated discussions that I have heard both yesterday 
and today. I must also confess how deeply I have 
been impressed by the articulation of people who 
do not belong to the academic world. I find, for 
example, that the analysis presented by Mr. Peter- 
son, who spoke a little bit earlier, is much more 
articulate than even that of the academic or the 
political world. I will take back with me these 
impressions, as an index of the skills that ase 
fostered by the economic system in this country. 
Just two or three points I wanted to make. I 
am expected to express views on policies of gov- 
ernment toward the creation and use of technology. 
My country, India, provides a star example of how 
almost everything which has been suggested here 
in the course of the statements of these two days, 
can be tried. 

Prominent Place of Science in Government of 
India 

For example, I can recall that immediately after 
the country became independent, the Government 
of India, under the stimulus of Mr. Nehru, issued 
a special government policy resolution on science. 
The policy resolution indicated the importance of 
science and technology in economic development, 
gave the scientist a very important place in Indian 
society, created a scientific policy committee in the 
Cabinet, and so forth. 

Then, definite steps were taken to foster scientific 
research in the public sector through the creation of 
laboratories of various kinds and of research sta- 



tions in government departments. Our government's 
expenditures for research, I think, went up from 47 
million in 1947 to something like 706 million rupees 
today, and we are still increasing our expenditures 
on scientific research. In our country, of course, 
these expenditures, unfortunately, are almost totally 
in and by the government; there is not any remotely 
comparable expenditure by private industry in my 
country. 

Support for Education of Scientists and 
Engineers 

Another thing is the question of adequate quantity 
and quality of scientific personnel. There again I 
think we started with about 90,000 persons entered 
in science courses. Today, the figure is 440,000 
persons who are engaged in science courses in my 
country. By the time we come to 1970 and 1971 
we will be under our Fourth Plan and we hope to 
reach a target of about 800,000 persons enrolled 
in science courses. It is not a very large number, 
because by that time the number of university stu- 
dents in my country will be between 2 and AVa 
million persons. 

There is a great need for persons trained in engi- 
neering courses. We began with a national capacity 
of about 6000 engineering graduates per year. The 
number is now 50,000 and is expected to go up even 
more. 

Developing Private Enterprise 

Then, we, too, have a national resource in the 
private corporations that are trying to make salable 
and marketable inventions based on the findings in 
these scientific laboratories. We have something like 
40 national science laboratories — some are basic 
research laboratories, and some are commodity 
laboratories. All my countrymen may not agree 
with me, but I think the latter kind is especially 
productive as far as development of commercial 
innovations are concerned. 

Financial Encouragement 

Because we have such a need to promote new 
enterprises, we have special depreciation allowances, 
we have development banks and special loan sources 
for making available funds to the private sector. As 
far as foreign capital is concerned, we welcome 
foreign capital. I think I can say with a sense of 
pride, mine is the one country where any foreigner 
is treated so that he may feel completely at home. 



104 




V. K. R. V. RAO is a Member of the Planning Commission of the Government of 
India, with responsibilities for Agriculture, Education, International Trade, Social 
and Economic Research and Program Evaluation. In this position, he holds the 
rank of Minister. He is also Professor of Economics at the University of New 
Delhi, a post which he has occupied for twenty years. Professor Rao in addition 
serves the University as Vice Chancellor. 

Professor Rao founded the School of Economics at the University as well as the 
Institute for Economic Growth. He has also been active in the U.N. as Chairman of 
its Subcommittee on Economic Development from 1947 through 1950, and as a 
member of the U.N. Committee of Experts for Definition and Measurement of 
Standards of Living. 

Professor Rao is a graduate of both the Universities of Bombay and Cambridge. 



I don't think there is a single recorded example, in 
the last twenty years, of acts of hostility toward any 
foreign enterprise within my country. There is no 
discrimination and all tax incentives and fiscal in- 
centives are available to foreign enterprises as well 
as our own. In spite of our being a democratic 
socialist country, we have no foreign investment 
controls. We are relaxed in our procedures; we are 
trying to stimulate growth by creating a favorable 
climate for foreign enterprises to come in. 

How Have All the Policies Worked Out? 

With all this attention, support and these re- 
sources, we have not succeeded in accelerating our 
economic development significantly. We have had 
some economic growth, and undoubtedly we are 
infinitely better off than we were twelve years ago. 
Nevertheless, we are nowhere near where we would 
like to be, nor has there been anything like a sig- 
nificant reduction of the gap between us and other 
major countries of the world. And, there are a lot 
of countries who have not been able to achieve this 
either. The failure is not trivial when it occurs in 
my country, India, numbering five hundred million 
people, and occupying a key position in the Asian 
continent quite apart from being an old and not 
entirely an uncivilized nation. 

Now, what can we do? And this is a question 
which, if I may say so, we should discuss at length 
in a seminar such as this, but dealing specifically 
with the developing countries. 

In trying to use technology and science for eco- 
nomic growth, I think it is important for us to 
realize that this cannot be treated as a matter of 
individual national policy. It cannot be handled only 
by each national government to meet its own prob- 
lems, especially for those governments which find 
themselves occupying what is called a dominant 
world position. In some ways such governments are 
creating more problems for the developing coun- 
tries, simply by the speed with which they are 
advancing their technologies relatively to the rest of 
the world. 

NOTE: The remainder of Professor Rao's text is 
paraphrased from his remarks, which, unfortunately , 
were not recorded in toto. 

I am not suggesting that they should stop advanc- 
ing their technology, but every advance made in the 
developed countries does make it more difficult for 
the developing countries to catch up or reduce the 
gap that exists between them. I would like to take 
just a couple of minutes to propose some means for 



creating the conditions under which the developing 
countries can make use of technology for their own 
economic growth and for modifying their basic 
structure so that they may take their place among 
the growing and dynamic nations of the world. 

We recognize that this will require a highly imagi- 
native, as well as organized effort. A country like 
mine which represents a significant portion of the 
world's population approaches this era with the 
problem of surplus labor. Nearly 70% of our work- 
ing population is engaged in manual or agricultural 
occupations. One cannot continue to have 70% of 
the population so occupied for an indefinite period 
if you want to establish the basis for economic growth 
and an opportunity to use technology to our national 
advantage. 

Then' we also suffer from a scarcity of capital. 
With the limited number of industrial operations, 
our capability to generate capital from earnings is 
severely limited. These two conditions reinforce one 
another to create serious barriers. 

One of the fundamental requirements for utiliza- 
tion of science and technology in the underdeveloped 
countries is for the population to have functional 
literacy. Here again it is only a very small propor- 
tion of our population that is now able to read and 
write, which again limits the opportunities for eco- 
nomic growth and the contribution of science and 
technology. 

What Remedies are Available: 

There are some proposals I would like to offer for 
consideration with this audience. These suggestions 
may not all be able to be taken up concurrently, but 
I hope that, together, we can make some progress 
through applying ourselves to meeting the problems 
described earlier. 

First, I would propose that we use the most 
up-to-date training methods to rapidly expand the 
proportion of our population that has functional 
literacy. Is it not conceivable that a massive pro- 
gram conducted during a period of six months to a 
year could increase significantly the proportion of 
our population which can use written instructional 
material? The increased capability of these trained 
people would begin to make our large population 
useful in the modern economic development process. 

Second, I would propose the establishment of 
an international agency that would be concerned 
with the technological health of the developing 
countries. We already have analogies in the field of 
public health. We now need institutions that could 



106 



provide the necessary technological constituents of 
a functioning economy. Such an agency would, on 
the basis of its experience throughout the world, 
be able to bring about conditions, throughout the 
developing world, that parallel conditions found 
satisfactory elsewhere. 

Third, we need to find new means to make 
private foreign capital available to support the 
growth of export industries in the developing coun- 
tries. Unless these countries can develop significant 
exports, it will be increasingly difficult for them to 
have the capital to purchase imports. It is, therefore, 
to everyone's interest that such export industries be 
built up and it may be wise to consider some pro- 
posals for sharing the export earnings between the 
countries furnishing the capital and the countries 
receiving it. In this way, the opportunities that 
exist for the developed countries in marketing to the 
underdeveloped world will have within them the 
seeds to make the developing world an active partner 
in future trade. 

Fourth, The success of the U.S. Peace Corps 
in the field of cultural and social development pro- 



vides a model that may be useful in the economic 
development area. Would it not be possible to estab- 
lish a "Peace Corps" which might contribute effort 
and talent for the scientific and technological devel- 
opment of the developing countries. If our countries 
can develop independent positions in science and 
technology through such an injection of the wisdom 
and experience gained elsewhere, our countries will 
be able to make a more constructive contribution to 
world economic development. 

Our over-all objectives should be, through the 
combined hard work of developing and developed 
countries, to create the conditions so that our large 
populations can become more significant producers 
and consumers of the world's goods and services. I 
trust that there will be additional consideration of 
the special problems of the developing world in 
symposia such as these. I would also encourage ex- 
perimentation with some of these proposals in rela- 
tion to the Indian economy which offers such an out- 
standing opportunity to demonstrate the feasibility 
of international cooperation in economic develop- 
ment. 



QUESTIONS FROM THE FLOOR 

Dr. Hollomon: As is usual with almost all affairs of 
men, schedules are difficult to keep; on the other 
hand, we have delayed lunch a little bit so we could 
have some more discussion between the audience 
and the panel. Do we now have questions, com- 
ments, suggestions, or controversy from the floor? 



into our successful economy, namely the profit- 
oriented R&D, and the entrepreneurship? If they 
don't really understand that, then would not the 
adaptation of just one element, a large amount of 
government R&D money, give them a distorted tech- 
nology that might accentuate the gap? 



Question: I have a question, primarily addressed to 
our foreign guests, either Dr. Major or Professor 
Rao. We have heard a brilliant exposition by Mr. 
Peterson on some of the components of our tech- 
nological environment. One is the tremendous influx 
of government money for contract research, and so 
on. Second is the large amount of private research 
and development wherein private companies support 
people in doing R&D and then to translate and con- 
vert it for commercial purposes. Third, we have the 
pluralism that Dr. Quinn mentioned, which is a 
many-sided way of encouraging entrepreneurs and 
enterprises to get started. 

My question really is this : There has been a lot of 
pressure, because of the so-called technology gap 
with Europe, to emulate our government's R&D 
sponsorship. Do European countries really under- 
stand the other two components that have gone 



Dr. Hollomon: I think Mr. Major might want to 
react to that. 

Mr. Major: The question is very rightly put and I 
think it is quite true that in Europe they do not 
understand this completely. Perhaps I could add 
now what I had in my manuscript on the tech- 
nological gap that gives an answer in a way. It has 
been suggested that there be closer research cooper- 
ation in certain fields between U.S. and Europe as a 
way to remedy the gap. That is the Italian sugges- 
tion. Such a cooperation may be a good thing, but I 
doubt whether it would have the expected effect. 

To my mind there is a gap, but I'm not certain 
that the reason the gap is there is to be found in the 
technological field. I believe that the fundamental 
reason for the gap is more a question of mentality 
and attitude. On this side of the Atlantic you are 



256-707 0-67— 8 



107 



more dynamic, you see more in the future. In Eu- 
rope we are, on the whole, more complacent. I think 
you have very often heard about the dollar incen- 
tive. Have you ever heard about a pound incentive? 
A franc incentive? Or a mark incentive? I never 
heard of it. Your attitudes have helped to establish 
the management skills, the big market, free of cus- 
toms, and the big industrial units. In such a system 
it is obviously appropriate to make use of science 
and technology as important tools for the growth of 
the whole system. 

Science and technology are and have been present 
in Europe for many years. What we'd like is the 
attitude necessary for the creation of more big in- 
dustries with leaders who know how to make use of 
science and technology. We also need politicians, or 
rather statesmen, who can create the bigger markets 
which are needed for our companies to grow. I men- 
tion this because I think it is important for govern- 
ments to consider the gap in full perspective. 

Dr. Casimir: First of all, I am very strongly opposed 
to speaking about "the" technology gap — using the 
definite article. I think that is entirely wrong. I 
don't even like to speak about a technology gap or 
technology gaps. 

What we have is a distribution of technological 
knowledge. In some cases the United States is 
ahead, and sometimes even far ahead, of Europe; in 
other cases they are slightly ahead. In a few cases 
Europe is ahead. Not even all of American technol- 
ogy is on one level — it shows a widespread dis- 
tribution from the very advanced technology to 
primitive operations. To speak about all these dis- 
tributions as being part of "the technology gap" is to 
create an artificial notion. It is getting into newspa- 
pers and it is getting into political discussions. I 
would like to abolish the words "technology gap" 
altogether, or if that can not be done, at least to 
abolish speaking about "the technology gap," be- 
cause it does not exist as such. 

Now, it is certainly true that there are symptoms 
that are alarming. They show that in the distribution 
of abilities there is considerable advantage to the 
United States in certain fields. Europeans don't wel- 
come this trend. The question is whether people in 
Europe realize that this certainly is not due only to 
U.S. Government spending for R&D. 

As you know, I have recently been around this 
country and interviewed people with a small OECD 
group. They will write a report on science policy 
practices in the United States. In our study, we tried 



to get more information on the influence of the gov- 
ernment spending on research and development. 

It is perhaps too early to formulate the conclu- 
sion, but still the general impression is that, al- 
though there is a positive influence there, it is much 
more indirect than many people in Europe believe. 
It is not so much the specific pieces of hardware and 
specific procedures that are turning out to be useful 
in the economic sphere, it is more a generally high- 
level of technology and a general managerial compe- 
tence. It was already suggested here to us that if you 
want to speak about a gap, it is more of a manageri- 
al gap and an organization gap than actually a tech- 
nology gap. As a matter of fact, if we bring people 
together in Europe in the right way, aimed at the 
right purpose, we can do quite well technologically, 
in many important cases. 

Take the CERN organization at Geneva, dealing 
with high energy physics; it certainly can at this mo- 
ment compete in results with high energy physics 
work anywhere in the world. The technology of the 
bubble chambers and their accelerator is quite as 
good as what you find here. It was all made in Eu- 
rope by a combination of European firms. If the 
aims are clearly stated and the organization is well 
made, I don't think that technology is the difficult 
part. 

Certainly there are fields where one has to rely on 
American help. One has to go to the United States 
for the big computers one needs. I don't consider 
that so very tragic. But there is one thing that one 
must never forget, and that is, that even when we 
train new managers and new entrepreneurs, the 
United States will remain a tough competitor. 

What I should like to propose is this. If America 
really wants to do something about the "gap," start 
introducing a different currency in each of the fifty 
states, and impose other serious boundaries among 
all the states. You have enough Italians, Greeks 
and Germans and Dutch people to create four, five 
or six official languages in the various regions. If 
you made a state with an official Italian language, 
be sure to incorporate minorities with another 
language or two. Otherwise it won't work or create 
the full effect. It would also help to have several 
of these states drive on the right side of the road 
and others keep to the left. It would be a nice 
project in operational research to work this out 
in such a way that you would get the maximum 
number of collisions. If this experiment were done 
and we then, ten or fifteen years from now, com- 



108 



pared your America with Europe we may well have 
bridged the gap, whatever it is! 

Dr. Hollomon: Are there comments from the floor? 
Yes. 

Mr. Rodney W. Meyer, of Hughes International 
Corporation: I would like to comment please. If 
there's a more technological group in the world than 
our company, I'd like to know where it is. We 
spent about 30% of the year, each year for ten 
years, in Europe and I'm going to take advantage of 
Mr. Peterson's characterization. I'm one of those 
fellows that divides people into two groups. Euro- 
peans divide themselves in two different classes. One, 
those that apologize and, two, those that work. Now 
let me be specific. In Mr. Major's country, Tandberg, 
as far as I know, makes the best hi-fi tape recorder 
in the world. I, among other people, have gone to 
the man who invented it trying to persuade him to 
use better components, and he says, "I'm not going 
to change a thing, it's the best there is." And he's 
right. I think the Norwegians are doing a great job. 
I know this, I never heard a Norwegian apologize 
for being a small country. 

Phillips Radio has something like eighty percent 
of the sonars designed to find fish, used in fishing 
fleets of the world. Their competitors are Raytheon, 
Siemens Electric and RCA. So there's no problem in 
being small, if you want to get to work. 

Dr. Hollomon: We will let you reply to that Mr. 
Major. 

Mr. Major: I don't think it needs any reply. It is 
quite true that we have some few people that are 
exceptional. I think that you will find that every- 
where. But what we are talking about here is more 
of a general situation in Europe. 

Dr. Hollomon: One might make a general point that 
in this country, too, small companies, starting new 
technical enterprises, don't have large markets ini- 
tially. They are not even competing for a large mar- 
ket. They start with small markets and then grow 
those markets. That is true here as well as anywhere 
else in the world. 

Are there other comments from the floor? 

Mr. Zvegintzov: I am from the National Research 
and Development Corporation, United Kingdom, a 
government-supported effort to encourage the devel- 
opment of government-devised technology in the 



private sector. I was extremely glad to hear what 
Professor Quinn and Mr. Peterson said. It looks as 
though your problems of this country are almost the 
exact same as those we are identifying in Britain 
today. 

I heartily agree with Professor Casimir also that 
there isn't the technological gap; it is primarily the 
organizational environment, the management, the 
dissemination of knowledge through the training of 
executives that accept and adopt what already ex- 
ists. 

We have based our organization on the principle 
that the best place to apply government R&D results 
is in and through industry. The job of research and 
development is to make money, not to give people 
fun; that's a by-product. What we do is to invest just 
enough money into our industrial partners to make 
them give our R&D developments sufficient priority 
to convert them into commercial innovations. We 
are providers of revolving funds of risk capital. In 
the event of success we get the capital back through 
royalties on the exploitation and commercialization. 
In the event of failure, we have lost our money. We 
can't say yet what the time cycle for full recovery is; 
it may be twenty years; it may be twenty-five; I 
can't say. But the effect is one of adding the catalyst 
to the business enterprise; the acumen which exists 
in industry sometimes requires a bit of an extra 
boost when new technology is involved. 

Dr. Paolo Rogers, Olivetti Co., Italy: Mr. Chair- 
man, from what has been said in this discussion it 
will appear that this symposium is about to conclude 
that there is no technological gap. If this is to be the 
consensus, I would like to register a dissenting vote. 
The gap may not be purely technological but there 
is definitely a gap, with a capital "G" — Europe and 
America are growing in different scales in different 
directions, and this is creating a very dangerous gap 
indeed within the Atlantic world. It may be due to 
poor organization, to inadequate dissemination of 
information, to lacks in management, to limited 
R&D, and to insufficient applications or use of fun- 
damental research. 

The semantics aside, Mr. Chairman, I think this 
meeting must recognize that a dangerous gap is de- 
veloping and that we need to find ways — for both 
sides — to deal with it. 

Professor Quinn: I would just like to make a brief 
comment on that. I think that the gap that you refer 



109 



to is genuine in certain areas. To me, one of the 
very important aspects that has not been emphasized 
in the discussions so far is the matter of the large 
initial demand and opportunity for relatively low- 
level technological skills. I go into many European 
bakeries, drug stores, groceries, et cetera, and see 
that simple time and motion concepts would release 
people into the society for much greater additions to 
production. This is also true in the underdeveloped 
nations where relatively simple technologies would 
release large numbers of people to do more produc- 
tive things. I hope that this will be recognized in our 
conclusion here. The gap has many dimensions; it is 
not solely one involving complex technologies. 

Dr. Hollomon: I would like to make one comment 
myself; I don't think anyone here is saying that 
there are not differences. Dr. Casimir has said, too, 
that it is neither simple, nor a single difference. 
There are many complex differences. Comparable 
differences exist right within the United States. We 
have those who are in the space and military efforts, 
which are at the forefront of technology, because the 
problem there is not one of cost but of performance. 
It is a difference which exists between the highly 
sophisticated scientific and technical business that 
depends almost solely on technology and the rest of 
the business world. 

I don't think the world is moving apart. There are 
new and highly sophisticated technical businesses 
which the world has never seen before and we hap- 
pen to have a lot of it here. The same techniques 
that apply to these highly sophisticated businesses 
do not necessarily apply, as Mr. Quinn has said, to 
the economy of the less developed country. We must 
learn and appreciate that there are different sciences 
and technologies that apply to that situation. That's 
the difference to which you refer. 

I'll take the prerogative of having the microphone 
and comment on Prof. Rao's arguments. I agree that 
the difference in technology between the less devel- 
oped countries, and the European, American, Rus- 
sian economies is a much more substantial problem 
than any small disparities between us and Europe, 
or even between Mississippi and New York State — 
the latter, by the way, is a large disparity, too. 



That difference is much more one in management 
skills and entrepreneurship than the differences that 
have been stated to exist between us and Europeans 
even though those are significant too. 

One of the great mistakes is that, as Prof. Rao 
mentioned himself, India has tried all the techniques 
that we suggested. It may be that those techniques 
only work for a highly developed country. They may 
not work at all for the kind of country that he is 
talking about. Entirely different means may be ap- 
propriate; we need to find them. 

Let's look at our own case, that of the United 
States. When we began to grow seventy-five to a 
hundred years ago, there wasn't much R&D. We 
didn't have scientific advantages; we didn't have a 
national policy on educating scientists and engineers. 
We didn't have a national research and development 
corporation. We didn't have government contracts 
to industry. None of the things which these gentle- 
men have suggested were available during the great 
take-off period of this country, which changed it 
from an agricultural economy to a manufacturing 
economy. We used entirely different techniques dur- 
ing that period of our development. Perhaps you 
don't teach to all those young people in India the 
same kinds of sciences we now teach. As the Vice 
President said last night — the "ics", nucleonics and 
physics and what have you, may not be the best 
approach. It wasn't what we used, for whatever 
that's worth. 

We made, in this country — the greatest political 
experiment that any country ever made — by estab- 
lishing the land-grant colleges, the state universities 
that taught the farmers and diffused the growing 
body of knowledge in agricultural technology. That 
was done by a national program, and it was done by 
a pluralistic decentralized institution, primarily by 
man-to-man conversation and education. 

All I'm suggesting is that for a country like India 
or Vietnam to believe that the methods which work 
today for the United States or Britain or Norway 
would work there is, in my opinion, a grave mistake. 
The application of the most modern sciences may 
not at all be appropriate. We don't really know the 
soundest approach. 



110 



Luncheon Program 



Introduction: 



Mr. Alexander B. Trowbridge 

Assistant Secretary of Commerce for Domestic and 
International Business 



Mr. Trowbridge: The site for this conference, these 
magnificent facilities of the National Bureau of 
Standards, are clearly the products of a highly ad- 
vanced economic structure. This new industrial rev- 
olution today is based upon the burgeoning technol- 
ogy, and the developed nations of the world lend 
new impetus to that revolution with each day of new 
inquiry and innovation. 

From all that has been said so far in this sympo- 
sium, including Mr. Rao's remarks just before 
luncheon, it is abundantly clear that we must focus 
on the position of the developing nations of the 
world who are not yet fully engaged in the develop- 
ment and utilization of technological progress. 

Mr. Reynolds raised this issue yesterday when he 
said we would probably be judged 50 years from 
now more closely on how we have dealt across the 
Equator, rather than across the Atlantic. And the 
Vice President eloquently spotlighted this area of 
concern last night in his challenging talk at the ban- 
quet. 

What has been done — and what more should we 
be doing — to make technology available to nations 
at all levels of economic development? 

Secretary Connor said yesterday that our efforts 
should be aimed at removing barriers and obstacles, 
and I can only re-emphasize that this is indeed the 



policy of the United States Government. We support 
and encourage the transfer of our technology to the 
developing countries. The achievements of Ameri- 
can research, the products of our free enterprise sys- 
tem, are available under the patent process through- 
out the world. We have active programs in 
promoting U.S. private investments, licensing agree- 
ments and joint business ventures with all the peace- 
ful developing countries of the world. 

And these programs are bringing with them the 
best of our technology and know-how. The coming 
year will be very important for the less developed 
countries, for it is then that the long-planned inter- 
national symposium on industrial development is 
scheduled to take place — probably toward the end 
of 1967. We hope that this symposium will do much 
to focus the attention of the developing countries on 
what practical steps they can take to realize their 
industrial development potential. We, in the United 
States, will give our full support and encouragement 
to that symposium, to which our next speaker has 
already given great leadership. 

It is a great honor and privilege for me to be able 
to introduce to you the United Nations Commis- 
sioner for Industrial Development, Dr. Ibrahim Hel- 
mi Abdel - Rahman. 



Ill 




ALEXANDER B. TROWBRIDGE is Assistant Secretary of Commerce for 
Domestic and International Business. Prior to assuming this post in early 1 965, he 
was President and Division Manager of the Esso Standard Oil Company of Puerto 
Rico. He was formerly engaged in the overseas operations of several petroleum 
companies in Cuba, El Salvador, Panama and the Philippines. 

A native of New Jersey, Mr. Trowbridge is a cum laude graduate of Princeton 
University (1951 ) where he majored in the Wood row Wilson School of Public and 
International Affairs. 

Mr. Trowbridge has written of his overseas business experiences as a contributor 
to Harlan Cleveland's "The Overseas Americans" and was a consultant in the 
preparation of "Spearheads of Democracy — -Labor in the Developing Countries," 
by George C. Lodge. 



Speaker: 



Address: 



Dr. Ibrahim Helmi Abdel-Rahman 
Commissioner for Industrial Development, 
United Nations, New York, New York 

Technology and the Developing Countries 



Dr. Abdel-Rahman: In my early days, I didn't hear 
much about "science and technology." We used to 
hear about science only. Everybody spoke about 
science. I think this combination, science and tech- 
nology, is relatively recent in literature. Even at 
UNESCO, which was established 20 years ago, they 
included science with a capital "S"; and even this 
was introduced with some difficulty in those days. 
Now nobody mentions technology without science, 
or science without technology, and it seems that 
they are very much related. 

Another word combination so often heard is "Re- 
search and Development." I think this is an inven- 
tion of the American corporation. Of course, it may 
not be a monopoly. R&D is now a recognized com- 
bined function: you don't speak about research 
without development, or development without re- 
search. 

Then, "transfer of technology." Transfer of tech- 
nology has been mentioned, I think, about 3000 
times in the last day or two, but how do you 
transfer technology? In books? By moving people? 
By what? What is technology itself? 

The Process of Transferring Technology 

The "transfer of technology" reminds me very 
much of a blood transfusion. You know that for a 
healthy body you must have blood. In certain situa- 
tions the blood is not there, so you choose some 
good blood and inject it by transfusion. Blood by 
itself has little value; however, blood within the 
body is of paramount importance. Along the same 
vein, it seems to me that even a whole room full of 
technology put in books or on "microfilm" won't do 
anything. I want technology to be inside the body. I 
want it to be inside a production process. I don't 
believe in technology by itself. 

Technology is generated within a system, and 
similarly is transferred and transplanted within a 
system. You cannot speak about technology sepa- 
rate from the system in which it works. People study 
blood, blood diseases, and blood circulation, but 
they don't study them for their own sake. Blood is 
thought of as a constituent of a system. 



What I mean by this anology is: In the advanced 
countries you have a system which operates the 
processes of production, of consumption, of creation 
of needs; you have research and development, and 
within this system technology moves; there is a cy- 
cle; there is a living body. 

Technology in the Economic Cycle 

When you go to the developing countries, you 
don't find this cycle. I think this is more or less what 
Professor Rao has been saying this morning. In his 
country, and my country, we do not have such a 
cycle, which goes this way: first you have production 
of goods, and services; then you have the purchasing 
power to buy this production; you have the incen- 
tive to increase production; finally, you have the 
technical capacity, the ingenuity for creating new 
techniques and procedures — that is where technol- 
ogy goes into the circuit. 

You can have institutes studying blood and insti- 
tutes studying technology, but these by themselves 
do not complete the cycle. 

Here at the National Bureau of Standards — and 
I'm so glad at last to be visiting this place — here 
you do not concern yoursleves directly with eco- 
nomics, you don't think about national consumption 
directly. You work on certain aspects of technology 
and development, but there are existing connections 
carrying whatever is going on here into the main- 
stream. 

In the developing country this is not so. There is 
no cycle. They get industry from outside, they get 
technology from outside, they get science from out- 
side — but inside the country, there is not enough 
circulation. 

The mechanism of the body there is not working 
properly. This means that we need to activate this 
cycle of life in the developing countries and to inject 
into this cycle the life-blood which is technology, in 
a way that will produce a growing economy. To me, 
this is more important than speaking about the 
"gap" and the "levels." 

Can we put dynamics inside societies so that they 
grow and generate their own energy and exercise a 
variety of functions? Can we get modern technology, 
advanced technology, to be a help in that? 



113 







IBRAHIM HELMI ABDEL-RAHMAN is Commissioner for Industrial Develop- 
ment jor the United Nations, an office he has held since appointment by Secretary- 
General U Thant in 1963* Following twelve years as a member of the faculty of 
Cairo University, Dr. Abdel-Ruhman became the first Director of the Egyptian 
Atomic Energy Commission, occupying this position from 1954 to 1959. Concur- 
rently, he was Secretary-General of the Council of Ministers and the National 
Science Council, and was Under Secretary and head of the technical staff of the 
National Planning Commission of the United Arab Republic. He also headed the 
U.A.R. delegation to the International Atomic Energy Agency in Vienna and was 
a member of the UN Conference on the Peaceful Uses of Atomic Energy. 

Dr. Abdel-Rahman, a native of Sharkia, United Arab Republic (1919), re- 
ceived his Bachelor of Science Degree from Cairo University, followed by post- 
graduate work leading to a Ph.D. degree from Edinburgh University. He also 
accomplished post-doctoral work at Cambridge University and later at Leyden. 

*On December 6, 1966, Dr. Rahman was appointed the first Executive Director 
of the United Nations Industrial Development Organisation (UNIDO) by the UN 
General Assembly. The functions of the Center for Industrial Development have 
now been transferred to UNIDO. 



There are economic levels, there are social levels, 
there are philosophical levels. If you like, there are 
"technological" levels. This differentiation by levels, 
as we have been told this morning, exists even in the 
United States — between industry and industry, and 
between state and state. Can one conceive of a so- 
ciety where all levels in all directions are equal? I 
think it would be a very dull place, by the way! 

How Can Technology Help Start the Economic 
Cycle of Life? 

What is needed is to recognize that in the under- 
developed countries, the poor countries, the cycle of 
life is not really working. We have to see how can 
you transfuse the technology which is already avail- 
able — not as something in itself, but in order to 
create this moving cycle. 

Technology used in production, whether agricul- 
tural production or industrial production, is the 
technology most necessary in the developing coun- 
tries. Yet the developing countries, without having 
this technology, can utilize outside technology. In 
my little village in Egypt, the farmer boys have tran- 
sistor radios. We have television, motor cars, jet 
planes; we are asking for and obtaining levels of life 
which are drawn from outside. Needs are created by 
this. But we do not have the corresponding industry 
that will produce these requirements at home or 
produce the wealth with which to buy these needs. 
This disrupts the balance between technology of 
production and — for the lack of a better word — I 
call it "modernization." In the underdeveloped 
countries, we aspire and do modernize our life by 
utilization of the cinema, radio, television, and 
health activities. But we are not so capable of in- 
creasing our industrialization. 

All the while, through the integrated system I re- 
ferred to earlier, these two functions (industri- 
alization and modernization) are moving in parallel 
paths in the advanced countries. You are producing 
color television, you invented color television, you 
are the consumer of color television. You have pro- 
duction, utilization of technology, consumption, 
moving parallel to each other. So, economically, 
this is a viable system. 

We in the underdeveloped countries are exposed 
to the results of technology, but there is a lag be- 
tween industrialization and modernization. What 
should we do to correct that? 

Three Possible Strategies for the Developing 
Nations 

A very easy reaction would be to shut oneself off 
completely from the outside and stop this moderni- 



zation. You could continue living in the underde- 
veloped countries in the life of the Middle Ages. So 
the readiest solution is the solution of isolation. 

A second solution — just as an alternative — is to 
create a selective barrier that will allow the technol- 
ogy of production to pass through but keep out the 
technology of consumption. We could stress heavy 
industrialization, we could stress modernization ol 
agricultural production, but not have shoes or shoe- 
makers, not have houses, not have television, until 
we build industry first. We could subject our politi- 
cal system to this requirement, forcing the whole en- 
ergy of the society into trying to make production 
and consumption come closer to each other to 
create a balance. This is a second alternative. 

A third alternative is to see that you get from the 
outside not only the television and other modern in- 
novations but also some support to be able to pay 
for television, and innovation. Today, we get sup- 
port for industrialization. But Dr. Rao doesn't want 
support. He is too proud. He wants our countries — 
and I agree with him — to be capable of producing 
things by themselves. We want to share in the hu- 
man development. We don't just want to be handed 
down things. I think Professor Rao will agree with 
me, that for a certain stage, outside help is needed, 
both economic and technological, provided that this 
outside help is going to lead to increased vigor, and 
fuller life and development of the developing coun- 
tries. It doesn't matter if it takes long, provided we 
can really get working. 

The Disillusionment with Foreign Aid 

This brings me to some of the disillusionment 
which we are experiencing about foreign aid. 
Twenty years ago, as a result of the Second World 
War, we in the underdeveloped countries passed in- 
to a stage of political maturity — a stage of de-col- 
onization, a stage of emergence of new nations — 
though some are very old peoples. We recognize 
that political independence, though necessary, is not 
sufficient. We also need economic availability and 
social change. The same principles were recognized 
fully by the advanced countries, including this 
country. This country created Lend-Lease during 
the war — a concept of sharing responsibility for vic- 
tory — and this country developed, also, foreign aid 
as a concept for joint responsibility in peace. 

After 20 years, there is disillusionment. In my 
opinion, this disillusionment comes from the fact 
that we underestimated the task and overestimated 
our tools and facilities for tackling it. We assumed 



115 



that a certain amount of aid was going to generate 
miracles, and that provided one does this trick or 
that, developing societies could change immediately. 
What we are discovering on both sides — the ad- 
vanced countries, and the underdeveloped countries 
— is disenchantment and disillusionment because the 
results are not up to the level of expectation. The 
difficulty is in the original expectation, not in the 
actual result. The original expectation was too high, 
and not based on real experience. Now we have 20 
years of experience and we should reexamine this 
situation. If this were done, we would find that what 
is needed is a better method of enabling the devel- 
oping countries to come and share in world activity 
for everyone's mutual benefit. 

I would like to comment also on the several 
points which Dr. Rao mentioned this morning. I am 
on the best terms with Dr. Rao. We know each 
other, we admire each other, but I have some com- 
ments nevertheless. 

He speaks about an international technology 
agency. Translated into my language, he wants a 
world blood-bank. I don't want that. I don't think 
you can store technology and then press a button, 
and technology will flow. What we need is some- 
thing different; namely that when you come to a 
country to establish an industry, available knowl- 
edge and experience that will create the physical 
productive entity must be examined first. In other 
words, I want technology to be embodied in an 
operation and a system; I don't want blood in test- 
tubes, I want blood inside living people. I am happy 
to see that Dr. Rao agrees with me. 

In a second point, Dr. Rao wants almost a super- 
sonic system of education. Within six months or a 
year he would like to educate people to be techni- 
cally and functionally literate. I leave it to more ca- 
pable people than myself to see if this can be done. 
I believe it should be done as part of a specific ac- 
tivity rather than just teaching technical literacy for 
itself. If you have a factory — and this has happened 
in many places : — and you take people who have 
never had any technological experience, and you 
give them training on the spot in a specific field, 
they acquire the necessary training to fit into the 
activity. We have seen this in the army technical 
services, we have seen this done in other fields. The 
question is not the transition from the unskilled 
worker to the skilled worker when you have provid- 
ed the organization that will supply him with real 
work. I don't object to Dr. Rao's appeal for rapid 
literacy if it can be done, but the essential point 



here is to believe that given proper productive facili- 
ties, the human interest and the basic capabilities, it 
is not difficult to build up the trained personnel re- 
quired. Training and industrialization move to- 
gether. 

On a third point — about export promotion 
through joint enterprise — let us wait until the after- 
noon session to hear more about it. Let us see, if the 
experts think it is feasible to establish modern in- 
dustrial production facilities on an appreciable scale 
in the developing countries — with the participation 
not only of foreign capital, but also of management, 
and export marketing — so as to utilize the labor and 
the raw materials of the developing countries in an 
increasing production based partially on the market 
demands in the advanced countries. This is a very 
serious question before us and it ties in with the last 
of the alternatives I proposed before. If we do not 
want the underdeveloped countries to shut them- 
selves off from the world, and if we don't want them 
to move in the direction of heavy industrialization 
exclusively at any cost, the policy to follow is to 
give them a chance to develop their resources jointly 
with the developed countries in an activating proc- 
ess. 

The Corporation as a Catalyst in the Develop- 
ment Process 

This brings me to an observation about the role 
of the corporation. I am not referring to the private 
corporation, or the public corporation, but the cor- 
poration as an institution. In the last 20 years or 30 
years the corporation, as an institution, has faced 
two very difficult battles successfully. 

The corporation has succeeded in the battle of 
labor. You now have the corporation working fairly 
well with labor. That was not the situation in 1900 
or even in 1930. In those days, whenever you spoke 
about social legislation for the improvement of the 
lot of labor, it was taken to be against the corpora- 
tion. But in the meantime, we found it is possible to 
have successful corporations with stronger labor 
participation and higher standards of living for la- 
bor. That is a very important achievement; it is the 
first of the two battles that the corporation as an 
institution won — namely succeeding in making 
peace, and collaborating with labor. 

The other battle, which I think the corporation 
also won, is the one with the public authority. In this 
country and other countries we wanted to find out 
whether the corporation could live in a society in 
which central public authority has to exercise cer- 
tain functions. Less than a decade ago this was sup- 



116 






posed to pose a conflict. With the corporation hav- 
ing interest on one side, and public authority having 
interest on the other, it was said that the two would 
have to fight each other, but we have found out in- 
stead that the corporation as an institution could 
live and cooperate with public authority, and peace 
between the two could be obtained. 

A third and new battle is coming up for the cor- 
poration. The corporation must recognize its inter- 
national role and responsibilities. This is where the 
question of export and joint enterprises comes. If 
you have a corporation in America, even if it is 100 
percent private, it must be recognized that, inherent- 
ly, while this corporation my be working in a 
specific industry, it has also an international respon- 
sibility. It does not just have responsibility toward 
the shareholder, which no one would deny, but it 
has a certain responsibility toward the public of the 
country in which it is domiciled. In addition, there 
is also an international responsibility. This interna- 
tional role and responsibility of the corporation is, I 
think, what we are trying to discover, and which 
may hopefully be very useful in solving some of the 
questions which Dr. Rao has put this morning, 
namely, to establish effective machinery for the 
transfer of technology. 

What Future for the Developing World? 

1 don't want to be an alarmist. On the contrary, I 
am an optimist, but I feel that — from my limited 
experience in the United Nations and in my own 
country and in the fields of science and administra- 
tion in which I have worked — the developing coun- 
tries within the current system of relations don't 
seem to have much of a future. This is very serious. 
This will become more and more apparent. The bal- 
ance of payments, the difficulties of foreign ex- 
change, the political instability, all of these are 
symptoms which are appearing in one form or the 
other. They are symptoms of the underlying fact 
that the present set of relations are not capable of 
being endured by the developing countries for long. 
There must be some basic change in thinking if we 
want to bring the developing countries — which 
represent two-thirds of the human population — into 
an active participation in the affairs of the world 
and to guarantee them some hope for the future. 

As things are, I cannot give the developing coun- 
tries any picture of optimism for the future. After 
20 years of effort, after all the aid they have taken, 
after all the good wishes and the resolutions they 
have received from the UN — where are they now? 



On what basis could you tell them that they have a 
future? 

In line with the title of this luncheon's discussion, 
in my opinion, this calls for a very intensive exami- 
nation of how to get technology, which is abundant 
here, to work in these countries — the technology of 
getting wealth, the technology of getting the progress 
which has been achieved here, to be realized there. 

The Need for Better Ways to Industrialize 

The technology is available. But how is it to be 
built into the systems of the developing countries? If 
we cannot do that, and do it quickly and with effec- 
tiveness, I don't see how the picture can change; 
instead I can imagine a lot of deterioration. 

How can it be done? I think this is a matter for 
examination. We in the UN have hardly started 
defining the problems. Referring back to the inter- 
national symposium that the UN Center for Indus- 
trial Development will sponsor within a year, we 
find that there has never even been an international 
meeting on industrialization before — never. Nobody 
thought of it. People have spoken of specific indus- 
tries or certain aspects of industrialization of the de- 
veloping countries; but to make it the total subject 
matter of an international meeting is new. 

We hope this coming symposium will be useful. 
We hope it will be useful in the sense of discovering 
the dimensions of the problem. We hope it will 
speak straight to the developing countries, because 
they, too, have made mistakes. There are bad ad- 
ministrations; there is bribery; there is laxity in the 
determination of policy. There is confusion of politi- 
cal factors and economic factors. There may also be 
prejudice against foreign participation, which may 
or may not be justified. There have been mistakes, 
and there are shortcomings. 

From the side of the advanced countries, one also 
has to admit, with due respect, Mr. Secretary, that 
the advanced countries will have to learn also. They 
should be shown — with all good intentions — that 
they have given aid for 20 years which has not suc- 
ceeded as much as it should have. Why is this so? Is 
it that more of it is needed, or that other methods 
are needed? How can we increase confidence be- 
tween the two groups of countries. How can we get 
the activation process I spoke of earlier going? 

The United Nations Symposium of 1967: Its 
Purposes 

So, we hope that some of these questions will be 
posed in the International Symposium. I am not say- 



117 



ing that they will be solved, but it will create a bet- 
ter understanding of the dimensions of the problem. 

We also hope that the new Organization for In- 
dustrial Development (UNIDO), which the United 
Nations is setting up now, with the full support of 
all countries, will play an important part in building 
this understanding. 

In the marvelous little booklet which I was given 
last night to read, on Science and Technology for 
Mankind's Progress, I noted that the United States 
is spending 22 billion dollars on research — 16 bil- 



lion by government and 6 billion dollars by in- 
dustry. I was wondering, could we take one percent 
of this to examine the effectiveness of the available 
methods of industrialization? 

We must define the problem. The advanced coun- 
tries are spending money. They are giving aid. They 
are giving loans. Would it be worthwhile using just 
one percent of this total — to see what is the problem 
and where are we going? 

I want to leave you with this idea to consider. 









118 



November 17, 1966 



Afternoon Session — The Transfer of Technology Through 
Enter prise-To-Enter prise Arrangements 



Mr. Stern: In this afternoon's session, rather than 
being concerned with the role of government, we 
shall be concerned with the role of enterprises, pri- 
marily private, and examine their role and effective- 
ness in the transfer of technology throughout the 
world. 

The chairman of this afternoon's session is a 
scholar of this field, Dr. Hollis B. Chenery of Har- 
vard University. 



Dr. Chenery: I assume a professor has been invited 
to be chairman because he looks at this problem 
from the outside while the other speakers are directly 
involved in the process. I have some observations on 
the process from my vantage point but I shall wait 



until the formal participants have spoken and then 
comment on some of their themes later on in the 
discussion. However, I would say that in my period 
with the U.S. Agency for International Development 
we were always impressed with the fact that the res- 
ervoirs of expertise and the resources to transfer 
technology were largely in the private sector, and 
that the government was essentially on the side 
lines, trying to motivate or facilitate private activity. 
To get anything really done on the technological 
side seemed to require private actors. It was much 
easier to get a dam or a steel mill built than to get 
the manager for it and particularly the system, as 
Dr Hollomon puts it, in which it was going to fit. 
Governments were really only observers in these 
aspects. 



119 




HOLLIS B. CHENERY is Professor of Economics at Harvard University. Cur- 
rently his research at the Harvard Center for International Affairs is directed at 
developing quantitive analytical techniques for the study of economic development. 

He formerly served as Director, Program Review and Coordination Staff, 
Agency for International Development (U.S. Department of State), and from 
1962 to 1965 was Assistant Administrator for the Agency. Dr. Chenery's early 
career included engineering assignments with the P/iillips Petroleum Company and 
the Southern Natural Gas Company. Dr. Chenery has also been Economist with 
the U.S. Economic Cooperation Administration and Chief of the Program Divi- 
sion of the U.S. Mission to Italy for the Mutual Security Agency. 

A native of Richmond, Virginia, Dr. Chenery received his B.S. degree in Mathe- 
matics from the University of Arizona and in Engineering from the University of 
Oklahoma. He was awarded his Ph.D. in Economics from Harvard University in 
1950. 

Dr. Chenery has carried on many international economic consulting and advis- 
ing assignments. Turkey, Italy, Pakistan, Japan and Israel are among the countries 
he has thus served. 






Market, and the emphasis by every industrialized 
nation on exports. All of these are really a recogni- 
tion of the need for international markets. 



Dr. Chenery: I would like to proceed with the 
formal program. Our first speaker is Mr. Elmer S. 
Groo, Vice President of I.B.M. World Trade 
Corporation. 



Mr. Groo: Mr. Secretary, ladies and gentlemen, I'd 
like to discuss this afternoon some of the issues that 
affect the way a business corporation does business 
overseas. In particular, I'd like to focus on the size 
of markets compared with the size of technology as 
measured in terms of its cost. 

Historical Experience in International 
Exploitation of Technology 

The basic question in introducing technology 
abroad, is always the market. Traditionally, interna- 
tional business has been effectively organized as a 
group of self-contained national markets. Cultures, 
customs, language, laws and national tastes have 
tended to define markets in terms of national 
borders. 

•Two decades ago, technologies were simpler and 
investments in development were, by today's stand- 
ards, rather modest. Technologies like jet aircraft, 
color television, computers, with their development 
costs running into hundreds of millions of dollars, 
were simply unheard of. 

It was possible in those days to bring a product to 
market with expectation of a profit in the relatively 
limited scope of national markets. 

The Need for International Markets 

The burst of technological developments of the 
last two decades, with their enormous costs, has de- 
manded the expansion of markets. Almost the only 
market that will justify some of today's advanced 
technologies is America. And for a company based 
in Europe or Asia, or for any company engaged in 
national trade, a single unified international market 
may be required just to justify the cost of tech- 
nological advancement. 

There are all kinds of recognition of this fact 
around us. The growing emphasis on international 
standards, the concept of a European Common 



The Conflict of National and International 
Markets 

Yet, the fact is that national markets do continue 
to exist. Each nation has its goals; each nation has 
interests of its own which influence its laws and 
which dictate common-sense rules for good corpo- 
rate behavior there. 

So we find a conflict. On one hand the company 
seeks an international market to support its invest- 
ment in technology. On the other hand it must satis- 
fy the national markets and the special needs and 
interests of a national economy. So the problem is 
how to organize in such a fashion that we can meet 
these conflicting needs. 

IBM's Approach to the Conflict Problem 

Without trying to speak for American business in 
general — I'm sure there are great differences be- 
tween companies — I'd like to describe how we ap- 
proach this problem in our own company. 

We start with the assumption that the need for 
our products and the function they perform are 
pretty much the same around the world. There may 
be differences in details but these are a matter of 
adaptation, not basic to the design of the machines. 
So the technological side of our business is run es- 
sentially on a uniform, world wide basis. 

Our second assumption is that we must operate in 
a given country as a part of that country's industrial 
economy, responsive to national goals and interests, 
and equipped to provide the same level of support 
and service to the customer that we would in this 
country. This means that we need a strong autono- 
mous country operation. 

Let me illustrate, using France as an example. 
I.B.M. France is not our largest operation, but it's 
one of the largest. It has eleven thousand employees, 
thirty branch offices, two manufacturing plants and 
a product development laboratory. The employees 
are all French, including the general manager. We 
learned long ago that we could not really satisfy a 
market as well on any other basis. With an American 
running an operation in a strange language and a 
different culture without an emotional commitment 
to the country, we could not learn as well the needs 
of the market nor the interests of the government, 
nor could we find and hire the best people or man- 
age them with the same appreciation and under- 
standing. 



121 







ELMER S. GROO is Vice President of IBM World Trade Corporation. Joining 
International Business Machines Corporation in 1941 as a Sales Trainee, he be- 
came a data processing sales representative in Philadelphia and was then sent to 
Washington, D.C., as a special representative. Following a four year naval career, 
he returned in 1 946 to a sales assignment in Philadelphia. 

After a period in sales and sales management, he was assigned special duties in 
the office of the Executive Vice President, subsequently being appointed Executive 
Assistant to the President of IBM in 1956. 

He was elected Vice-President in 1959, being responsible for European Opera- 
tions for a two year period. His present responsibilities include Personnel, Com- 
munications, Executive Development, Government Relations and Administration. 

Mr. Groo is a graduate of Drexel Institute of Technology. Mr. Groo is a Direc- 
tor of the Business Council for International Understanding. 



The principal preoccupations of the general man- 
ager of I.B.M. France, are marketing, personnel and 
finance. His responsibility for the laboratory is only 
administrative. In manufacturing, his responsibility 
is somewhat broader but it is still limited to execut- 
ing a plan worked out with manufacturing manage- 
ment at our international headquarters. While his 
advice and counsel are valued and often asked for in 
regard to manufacturing, both as it applies to 
France and as it applies to the total I.B.M. interest, 
he alone does not make a decision as to what prod- 
ucts will be produced in his plants nor does he de- 
termine production quantities. These are a matter 
for international decision because his plant is pro- 
ducing for the international marketplace. 

When it comes to personnel, he has complete re- 
sponsibility to find and hire and train the people he 
needs. In marketing, again his responsibility is com- 
plete. He gets help from the outside when he asks 
for it, but basically he has to sell and service the 
market. 

Above all, he is responsible for our corporate 
posture in his country. It is his job to know market 
needs, the attitudes of his government, the require- 
ments of his laws, and to see to it that we conform 
to them. He is the spokesman for what is best for 
I.B.M. in his country and, I assure you, we take his 
advice. 

We bring together the interests of I.B.M. France 
and the interests of the total corporation through an 
annual planning process. All operating plans origi- 
nate within the country. They are worked up 
through several levels of management and finally 
consolidated on a worldwide basis in the United 
States. During the process there is a good bit of 
negotiation on sales targets, marketing programs, the 
investment of funds and a host of other considera- 
tions. 

When the final plan is reached, the country gener- 
al manager has specific operating goals and respon- 
sibilities which he executes according to his own 
judgment. In this way, although he may not decide 
the final mission of his laboratory nor the products 
to be produced in his plant nor the volume of his 
production, he has a clear understanding of his re- 
sponsibilities which effectively enables him to man- 
age the operation in his own country. 

Management of Technology on an Interna- 
tional Scale 

Now looking at the other side of the picture, with 
all the variations in laws, customs, individual prod- 



uct needs and the need for responding to national 
objectives, how do we manage technology on an in- 
ternational scale? 

Well, first, when we plan a product we do it on a 
worldwide basis. While final specifications are deter- 
mined at the headquarters of our development divi- 
sion in this country, they reflect inputs from at least 
twenty countries around the world. Our product 
planners receive market requirements from all of 
our large countries, so that when we announce a 
product, we know that it will meet the needs not 
only of the United States market but virtually every 
significant market abroad. 

All of our computers, for example, handle not on- 
ly decimal arithmetic but sterling as well. Our out- 
put printers can print not only Arabic characters, 
but the Katakana alphabet used in Japan. Our type- 
writers can be supplied with type faces for any one 
of 22 different languages. Our banking equipment 
deals equally well with American or European 
checks. 

Incidentally, one of the beliefs that seems to per- 
sist is that the country less developed industrially 
will be willing and satisfied to buy the products of 
yesterday's technology. This may be true in some 
industries but it certainly is not so in ours. Develop- 
ing nations are aware of today's technologies; they 
are not willing to go through all the steps of devel- 
opment that we have in the West. Our African cus- 
tomers buy the latest, most sophisticated computers 
we have to offer and we have such machines in- 
stalled today in some inaccessible areas of that con- 
tinent. We have learned not to look upon these 
areas as second markets for yesterday's products. 

International Diffusion of Development 
Responsibility 

It is one thing to plan a product on an interna- 
tional basis and it's another thing to develop it that 
way. Yet the pool of technological talent is an inter- 
national one, and the ideas that contribute to the 
advancement of our particular industry have come 
from many countries around the world. We have six 
research and development laboratories in Europe 
and today we use those laboratories as part of a 
worldwide development organization. 

This was not always so. For some time we used 
our European laboratories primarily to support the 
local market. Fifteen years ago, when technology 
was simpler, this worked pretty well. As time moved 
on we found it harder and harder to make full use 
of the talent we had in limiting their mission to the 



123 



256-707 0-67— 9 



needs of a single country or even to a single conti- 
nent. 

When in 1961 we undertook the development of 
a new line of compatible computers in a new tech- 
nology, later announced as System 360, we made 
the decision to bring the European laboratories into 
the worldwide development program. The 360 line 
comprises six basic computers, compatible in con- 
cept and ranging in size from one designed to meet 
the needs of small to medium business, up to a sys- 
tem of great speed and capacity for the most com- 
plex computing requirements. 

The architecture for this system came from a va- 
riety of sources, with several basic concepts originat- 
ing in our European laboratories. Once the several 
units in the line were agreed upon, each laboratory, 
whether U.S. or European, was given a specific mis- 
sion. The smaller machine came from Germany. 
The medium-sized machine was designed in Eng- 
land, the larger computers in our U.S. laboratories. 
The French, Dutch and Swedish laboratories, as 
well as laboratories in the U.S., produced a variety 
of input/output equipment necessary to apply the 
computers to the wide variety of applications for 
which they were to be designed. 

In developing a single, compatible commercial 
product line, we obviously had a special need to 
maintain constant liaison between laboratories in the 
U.S. and our laboratories in Europe. With the magic 
of today's communications technologies, we were 
able to set up a network between the U.S. and Eu- 
rope, and by use of fascimile equipment to transmit 
not only messages but drawings as well. An engineer 
in our laboratory in Poughkeepsie, New York, could 
talk with and jointly design circuits with an engineer 
in Hursley, England, transmitting designs back and 
forth as they worked. 

Although we do not take the credit for it, we 
think the day-to-day relationships between our en- 
gineers, which were made possible by this network, 
represented a great advance in bringing the tech- 
nological abilities of a lot of nations to bear on the 
solution of a single problem. 

Manufacturing in Local Markets 

We've talked about planning and we've talked 
about product development. The final step in our 
technical process, of course, is manufacturing. We 
plan our production programs on an international 
basis but we believe in manufacturing in a local 
market whenever the economics of the situation al- 
low it. 



There are some technical advantages in terms of 
closer support for products in the field. Certainly 
transportation is simplified and, at least in the Com- 
mon Market, the duty picture is more favorable. 
The most significant reason, however, that we manu- 
facture abroad, is that it involves us in the local 
economy in a positive, contributory way. We employ 
people, we buy parts and components from local in- 
dustry, and we contribute directly to the export pro- 
grams which are so important to a national econ- 
omy. 

Training of Work Forces 

With all its pluses, the manufacture of a compli- 
cated product in more than one location poses some 
real problems, especially when the manufacturing lo- 
cations may be thirty-five hundred or even eight 
thousand miles apart. There are, obviously, some 
duplicate investments in production equipment. 
Much more important are the duplications in the 
training of a work force. Our particular products 
involve a high skill-level, and we expend a great 
deal of time, money and effort in assuring that our 
people have the same level of training in every loca- 
tion. 

One of the things we do to meet the training need 
is to transfer people for a temporary period of six or 
twelve months to laboratories where products are 
developed and to plants where technical control will 
remain. The people return as fully trained as their 
counterparts in other plants and can act as a skilled 
cadre to set up a full work force when a product is 
released to production. 

Standardization 

We make a special effort to maintain worldwide 
engineering levels. We believe that this is fundamen- 
tal for many reasons, not the least of which is pro- 
viding the same services to our customers, regardless 
where they are. To start with, we have an active 
effort in standards. An important segment of our en- 
gineering force is devoted entirely to the problem, 
and all of our specific product design is executed 
against a predetermined set of standards. Design 
drawings carry both the Anglo-American system of 
feet and inches and the metric system used by the 
rest of the world. This gives us a common base, and 
as we make improvements in products — and we do 
— we transmit from the point of engineering control 
to all points of production, via computer, the latest 
engineering changes on an overnight basis, so that 



124 



they can be reflected simultaneously in current pro- 
duction at all points where the machine is made. 

Function of Patents 

Another facet of our efforts in technology and 
which has to be an influence in any fast-moving 
field, is that of patent protection and access to the 
patents of others. We maintain patent departments 
in the larger industrial countries of the world and we 
file our patents on an international basis regardless 
of their source. An active program of licensing pro- 
vides the freedom of action that enables us and 
others in our field to develop and bring to the mar- 
ket products of the latest technology, without fear of 
accidental patent infringement. 

IBM Looks at the Future 

A Symposium such as this is concerned as much 
with the future as it is with today, and I'd like to 
take just a minute to talk about the future. 

Recently we conducted an experiment with high 
school students in New York City. Through tele- 
phone connections, they had access to a computer at 
our research laboratory in Yorktown Heights, New 
York, which helped them do their mathematics 
homework. Professor Quinn told me that Dartmouth 
College is doing the same for students at Dart- 
mouth. On numerous different campuses of Ameri- 
can colleges today, computers are assisting instruc- 
tors in teaching a variety of academic subjects to 
undergraduates. And early this month the first time- 
shared system designed specifically for educational 
purposes went into operation, assisting in teaching 
over a hundred first-grade students in Palo Alto, 
California. 



A number of hospitals are using computers today 
to assist in analyzing electrocardiograms, blood 
tests, and in a series of other diagnostic applications. 
One airline uses computers to make it possible for 
an airline passenger in Rome to request a seat on a 
plane out of New York and to get confirmation 
from his agent in a matter of seconds. So the time- 
sharing system, the use of computers in education 
and medical science are already a reality. In certain 
fields the worldwide computer network is already in 
use. These are only the beginnings of what might 
come about just in our industry in the next ten 
years. 

I'm sure that other industries have the same en- 
trancing possibilities. The significant thing is that the 
direction of technology continues to move toward 
serving the individual, whether he be American, 
European, Latin American or Asiatic. 

A meeting such as this, examining the practical 
problems of bringing technology to the individual 
wherever he is, is enormously significant. One thing 
that it underlines is that our success in business or- 
ganizations will be very much measured by how well 
we carry our technology to international markets 
and, perhaps equally significant, how aggressively 
we bring foreign technology to use in our own mar- 
ket. 

Improvements in communications and transpor- 
tation will create a market demand which is more 
international than national in character. Television 
satellites and supersonic flights will certainly break 
down national barriers. I suspect that there will con- 
tinue to be nationalism, and national markets, in a 
certain sense, for a long time to come; but I believe 
that the mobility of people and the mobility of ideas 
will assure the fact that there will also be mobility of 
technology. 



125 



Dr. Chenery: Our second speaker, Dr. Aurelio Pec- 
cei, will give us a European view of some of the 
same issues. Dr. Peccei as far as I can tell wears 
three hats. He is managing Director of the Olivetti 
Company; he is also head of Italconsult, an interna- 
tional consulting and engineering firm which deals 
with underdeveloped countries, and he is on the Ex- 
ecutive Committee of the Fiat Company. He tells 
me he's going to draw on all of these backgrounds 
in his presentation. 

I might mention my own one experience with the 
Olivetti Company, when I was working in Italy 
some years ago. I was much impressed in visiting a 
new Olivetti plant, outside of Naples, when I was 
told, first, that almost none of the labor force had 
had any previous experience with this technology 
and that the employees had been selected on a psy- 
chological basis rather than on their experience, and 
second, that in two years the Naples plant had 
reached the productivity of the Turin plant through 
proper training and proper management. Such 
transfer of technology within Italy itself is a fasci- 
nating achievement because the south of Italy, par- 
ticularly in the past, has had the same kinds of edu- 
cational deficiencies as the underdeveloped countries 
have now. I hope that Dr. Peccei may be able to tell 
us that such development can also take place else- 
where. 



Dr. Peccei: Mr. Chairman, Mr. Secretary, ladies and 
gentlemen. I am the last formal speaker before the 
discussion and I suppose that by now, after the bril- 
liant addresses of yesterday and today, you will be 
well prepared for an anticlimax. 

I enjoyed the symposium immensely. I learned 
very much from the previous speakers and from the 
panelists, and from the scientists back in the labs as 
well, but I would flatly refuse to submit to a 
proficiency test on what I learned. 

Before entering into my subject — which, as I un- 
derstand it, should mainly refer to industrial tech- 
nology — I want to make a few general remarks. 
First, I submit that the problem of spreading tech- 



nological progress ranks at least equal in importance 
to technological advance itself. 

The Problems of Technology Transfer 

There is a continuous and increased acceleration 
in the advance of science-based technologies. Under 
proper conditions, progress has become practically 
self-propelling. The dramatic technological revolu- 
tion we are going through is indeed radically trans- 
forming our society: it generates "real mutations," a 
change in kind, not merely in degree. The conse- 
quence is that the dialogue, even between two na- 
tions, friendly but having a different level of devel- 
opment, tends to become extremely difficult, as if it 
were between two different species of civilization. 

This is why I maintain that, in order to keep a 
fairly homogeneous pattern of society for the 
different human groups which should stand together 
— for instance, the nations we would like to see 
forming the Atlantic Community — we should devote 
an equal effort, as we go on producing technological 
progress, at devising how it can be moved speedily 
from one country to another in the Community 
area. Otherwise, this technological bounty, not prop- 
erly distributed, will become a dangerously divisive 
factor. And, as we live in a time of history when 
regional or continental integration and unity has be- 
come an imperative prerequisite for orderly 
progress, if not final survival, this danger needs to 
be underscored. 

When we say that the dimension of the nation- 
state is nowadays inadequate practically on all 
counts; when this inadequacy applies equally to na- 
tion-groups of sub-continental size, such as EEC 
and EFTA; when Europe itself is not enough, and 
our objective has to be "a Europe-plus;" when the 
very Atlantic Community should be conceived not 
only as an irreversible partnership among West 
European and North American nations, but also as 
the hard core of a wider cooperation area and the 
rallying point for other important outside regions; 
then, we must conclude that revolution-carrying 
technologies should in fact move as freely as possi- 
ble within the inner Community area; and also in 
reasonable measure to and from the outer regions 
flanking it. 

This has become one of the urgent and funda- 
mental problems we have in front of us, perhaps not 
less important for our future than the quest for 
peace in a nuclear era and birth control in the face 
of demographic explosion. 



126 



Effect of Development Level on Technology 
Transfer 

I have here a second general remark. There are, 
on the other side of the coin, a great many difficul- 
ties in the transfer of technology, however vital this 
transfer might be. Among others, a condition to 
carry it out successfully is the existence of compati- 
ble levels of development and organization among 
the countries concerned. This means that only in the 
general framework of compatible development levels 
can transfer of technology, enterprise-to-enterprise 
or otherwise, be effective. Experience has shown 
that to absorb into its national fabric and socio- 
economic setup the technology which is being trans- 
ferred to it, the "host country" must be prepared to 
receive it. 

The concept of a compatible level of development 
does not refer only to the technological gap, which, 
if too great, would not permit the transplant of tech- 
nology between two countries. It involves the capac- 
ity of the recipient country to live with the new 
technology, adapting it to its own economic organi- 
zation, basing on it a process of industrial 
diversification, assimilating it into its own education- 
al institutions, so that this alien input may be trans- 
formed into a national asset. 

Effect of Nature of Development Interests 

There might be also sectorial incompatibility. For 
instance, I would question the validity of the 
transfer to my country, Italy — if it were the case — 
of some of the U.S. space technology. This type of 
activity is and will remain for a long time alien to, 
and therefore its transplant would be incompatible 
with, her kind of development. 

For another example, we may take the Soviet 
Union. Here we have a technologically and cultural- 
ly advanced nation "par excellence." Yet her organi- 
zation level is not compatible with that of the U.S. 
or even Europe, in some broad and fundamental 
areas of human endeavour and interest. This is the 
case of a whole range of mass production-mass dis- 
tribution activities which characterize our consumer 
economy. The Soviet system simply is not rigged to 
take in, and profit by, Western technology in some 
fields, such as motorization and automation. The 
transfer from the West to the Soviets of, for exam- 
ple, our automotive technology — planning, design- 
ing, tooling up, manufacturing, marketing, selling, 
financing, handling, servicing and finally destroying 
motor cars — of course does not present insurmoun- 
table difficulties. But even this will require a basic 



reshaping of the Soviet organization, and sometimes 
the recourse to odd solutions, such as an extreme 
verticalization of their manufacturing setup. 

This transfer of technology will in any event re- 
quire rather a long time and, in my opinion, cannot 
materialize through the effort of Europe alone. The 
same can be said of another example concerning the 
manufacture and dissemination of modern office ma- 
chines in the Soviet administration, which is em- 
barking only now in a process of mechanization and 
computerization similar to that existent in the U.S. 
and also in Europe, and which, although so ad- 
vanced, is nevertheless still in the midst of a further 
profound evolution. On the other hand, the transfer 
of technology between countries and in fields having 
compatible levels of technico-scientific development 
and organization can be most fertile and effective, as 
many examples, including that of Olivetti-Under- 
wood, will indicate. 

Effect of Stage of National Development 

On the other extreme, the less developed coun- 
tries offer the most evident necessity and the highest 
difficulty in transferring technology. Here company- 
to-company transfer of new technology can be effec- 
tive, especially to countries whose system is so 
different from ours as not to permit an easy transfu- 
sion of our technology. I am sure that we are not 
yet able to assess in depth what might be the after- 
math, in third world countries, of the second indus- 
trial revolution now taking place in the most ad- 
vanced countries. 

Two-thirds of the world population have not yet 
adjusted themselves to the first industrial revolution 
which started more than two hundred years ago. 
Technologies simpler than those we are now cur- 
rently considering — for instance those necessary for 
making agricultural implements, conventional and 
machine tools and pumps, for improving agricultural 
yields or better harnessing and using surface water 
— have not yet been transferred to many of those 
countries which nevertheless are euphemistically la- 
beled developing countries. The consequence of this 
maladjustment is unending wrath and turmoil. 

Many of these less developed, generally small and 
often isolated countries, are so attracted by our 
breakthrough and achievements that they end in 
aiming at industrializing themselves chiefly along the 
wrong avenue of the glamour industries and technol- 
ogy. In this manner, efforts are displaced from more 
useful fields and, if eventually these more sophisti- 
cated technologies are transferred, they will be ill 



127 




AURELIO PECCEI is Chief Executive of the Olivetti Company, to which position 
he was appointed in 1964. Since J 957, he has also headed Italconsult, an interna- 
tional consulting and engineering firm headquartered in Italy and specializing in 
development projects in Africa, Asia and Latin America. 

He has also been connected with the Fiat automotive company since 1930, 
where he has special responsibilities in the area of international affairs and is a 
member of the Executive Committee. 

A native of Turin (1908), Dr. Peccei received his Doctors degree in economic 
and commercial science from the Turin University. 






absorbed, and cause more dislocation and delays 
than good. In conclusion, my point is that, as it is 
difficult to regulate the flow of technology to less 
developed countries, it is equally difficult to transfer 
the appropriate technology to them. 

Need for Emphasis on Social Facets 

This is a major international task. To carry it out 
we have to concentrate not only on the scientific 
technologies, but, even more so, on social and politi- 
cal science studies and on social technologies. These 
latter deserve a higher priority than we have hereto- 
fore granted to them. This does not apply only when 
we deal with underdeveloped countries: it holds also 
when we look around at our highly developed na- 
tions. 

To illustrate these points, I will quote from the 
experience of the companies with which I am asso- 
ciated. 

The Olivetti-Underwood Case 

The Olivetti experience in the United States 
affords a case example of the possible transfer of 
industrial technology, in the broadest sense, between 
two private corporations, operating in a sector in 
which the two countries involved have compatible 
levels of development. It is also a case example of 
cross-fertilization, demonstrating that cooperation 
— not only in technology, at that — between Europe 
and the United States can be a two-way affair, 
if earnestly pursued. 

Olivetti took over control and management of the 
then Underwood Corporation in the fall of 1959. 
Initial investment for the purchase of approximately 
one-third of the Underwood stock was in the order 
of 8 million dollars. Throughout the years 
1960-1963, the initial investment was considerably 
increased, and today Olivetti has total ownership of 
its U.S. subsidiary — whose name is now Olivetti Un- 
derwood — with an investment of almost 100 million 
dollars. Yet, in our judgment, even more significant 
than the size of the investment is the total involve- 
ment of managerial techniques in the various areas 
of the Underwood venture: manufacturing, servic- 
ing, marketing, training and management in general. 

Olivetti brought to the United States its manageri- 
al techniques and philosophy, its industrial design, 
its salesmanship, its personnel training; but instead 
of reshaping Underwood merely as a reflection of 
Olivetti, a new experience was started. Olivetti, 
in turn, tested and received from this country, 



through Underwood, new methods and ideas. The 
result was the emergence of a set of revised tech- 
nologies in all sectors concerned, which constitute 
an important asset not only for Olivetti Underwood 
but for Olivetti as a whole. 

Our estimate at first sight had been that the Un- 
derwood typewriter factory in Hartford obviously 
needed substantial rejuvenation; but the vast sales 
organization of Underwood, spreading all over the 
United States, should have represented the positive 
part of our purchase. 

The Production Problem 

The streamlining of the production facilities at the 
Hartford plant involved the challenging task of pro- 
ducing at an acceptable cost per unit. First of all, we 
redesigned the products, pooling together the experi- 
ence of Hartford Engineers and designers and of our 
experts in Italy. In this area a fruitful cooperation 
immediately developed, without friction or delay. 
Then, to produce a line of new typewriters, the fac- 
tory was re -tooled with modern equipment and ma- 
chinery, and new production methods were intro- 
duced such as were used in other Olivetti factories 
around the world. This brought about a rapid trans- 
formation of the old factory which, even within its 
old brick walls, in a few months' was put in a posi- 
tion to turn out new products under high standards. 

The Marketing Problem 

This, however, proved in reality less trying a job 
than the reshaping of the sales organization, the 
marketing services and the organization to maintain 
and repair all models of our machines. Soon after 
takeover it was realized that to sell and service the 
range of our products, sales and services personnel 
had to be trained in great number. This was done on 
the basis of a crash program which started by bring- 
ing to the United States a group of Olivetti instruc- 
tors from the Olivetti Training Center in Florence. 

Olivetti's methods, both in recruiting and training, 
were already quite sophisticated, and we felt they 
would provide a positive basis for the rebuilding of 
Underwood. Yet, as we acquired a deeper knowl- 
edge of the U.S. market, we realized that a number 
of adjustments were needed in our own techniques 
and methods, to better respond to our new environ- 
ment. This is the case, for instance, of maintenance 
and repair activities, where Olivetti's experience had 
been both original and extensive. However, when we 
transplanted to the United States our methods for 
the instruction of service personnel, we found that 



129 



new methods being explored in this country in the 
general field of education offered good possibilities 
of use to us. Thus we were among the first to adopt 
methods of programmed instruction based on the 
experience of the U.S. Armed Forces and the stud- 
ies of various organizations and universities. 

Our interest in continuing this process of transfer- 
ring U.S. knowledge back to Italy is evidenced by 
our program for retraining Olivetti middle manage- 
ment in various business schools in the United 
States. Our aim is to expose our management to the 
fresh influx of modern business teaching, as prac- 
ticed in the U.S. Also, in R&D, we have developed a 
regular exchange of information and experience be- 
tween our base in Italy and the Olivetti Underwood 
research unit in Hartford. 

Personnel Management 

In the field of personnel management, we pro- 
ceeded on the basis of the Olivetti philosophy, which 
considers the human element as the most valuable 
asset. This basically humanistic concept, which rec- 
ognizes in our human potential the greatest element 
of strength for the corporation, was enforced when- 
ever possible. In this respect one should note that 
the Olivetti approach was probably a step ahead of 
the standard U.S. business practices of the time, and 
we are gratified in seeing the evolution which has 
occurred since. 

As the result of all these combined efforts, Under- 
wood, which for nine years had been a nonprofitable 
operation, is again in the black, as Olivetti Under- 
wood, since early 1964. Fortune Magazine in its Ju- 
ly 1966 issue, listing the major 500 U.S. corpora- 
tions, singled out Olivetti Underwood for the most 
spectacular proportional gain of 1965. In this case 
of technological exchange between Olivetti and Oli- 
vetti Underwood, one should say that if it is not 
unique, neither is it the rule of transfer of technolo- 
gy across the Atlantic. Furthermore, we must bear 
in mind that its successful and extensive results took 
place between two companies belonging to the same 
group. 

Other Instances of Technology Exchange 

Speaking as an Italian and coming from what is 
generally considered in the U.S. a "host country," I 
must say that not always has the experience of 
transferring technologies from your country to my 
country been satisfactory, either at the receiver's 
end, or, I gather, at the giver's end. I will not quote 
names or point out instances. There is, however, I 



am afraid, a growing belief in Italy and Europe that 
the negotiation of an agreement with a U.S. com- 
pany is extremely difficult when the transfer of im- 
portant technology is involved; and that its imple- 
mentation eventually becomes even more difficult in 
the long run. This is probably due to the fact that a 
dynamic company, setting the pace in innovation 
and technological development (admittedly a U.S. 
company, as this is the most common case) hardly 
sees its interest in farming out to another company 
in Europe the most precious ingredient of its suc- 
cess — its know-how or its painfully acquired achieve- 
ments in R&D. 

The U.S. company may be induced to adopt this 
course (instead of installing a subsidiary directly in 
Europe, for instance) if it is temporarily too busy at 
home, or with the aim of gaining a foothold in the 
European market by a combination with local 
partners. But generally, once the initial honeymoon 
is over, the technologically senior U.S. partner, 
which by virtue of this fact is also the prime mover 
of future developments, is bound by the logic of its 
dominant position to escalate its requirements: from 
a technical agreement to an equity participation, and 
from a minority position to control of the European 
company. And this may spell difficulties. 

There are, of course, exceptions. Such is the case 
notably of new technologies developed by small 
companies which cannot exploit directly in Europe 
their know-how and patents, and prefer to do it 
through a license agreement. Another case is when 
the patentability is doubtful or the patent rights are 
difficult to enforce. The practice of cross licensing, 
which is spreading on the spur of these difficulties, 
may prove very beneficial for a more generalized 
transfer of technology. Nevertheless, serious limita- 
tions remain in the transfer of technology between 
companies when they do not belong to the same 
group. And this applies not only to the case of the 
U.S. versus Europe, but also to that of Europe ver- 
sus less advanced countries. 

Wholly-Owned Subsidiaries vs. Licensees 

The example of Olivetti comes in handy again. 
Whenever Olivetti considers transferring its technol- 
ogy to another country it never chooses to deal with 
third parties, but rather tends to establish wholly- 
owned subsidiaries for the manufacture of Olivetti 
products. This of course is a practice that may not 
be applied everywhere and therefore has a restrictive 
element imbedded in it. This approach was followed 
by us in the United Kingdom, Brazil, Argentina, 



130 



Canada, South Africa and Mexico, with very good 
results of technological transfer. One exception is 
Spain, where simple control of that subsidiary had 
to be substituted for total ownership, as local regula- 
tions limit foreign participation in certain industries. 
I know of many other corporations having a simi- 
lar policy, which, inter alia, facilitates a rational- 
ization of production among manufacturing estab- 
lishments located in different countries. The spread 
of the multi-national company responds, among 
other things, to similar needs, and helps the interna- 
tional flow of technology, albeit within a restricted 
circuit. In two cases Olivetti gave to third parties the 
license for the exploitation of its designs and know- 
how. The first case was India, where Olivetti sup- 
plied the necessary machinery, licenses and know- 
how for the establishment of a teleprinter factory, 
totally owned and operated by a state company. The 
second case is the agreement still under negotiation 
with the U.S.S.R. In both cases, this was the sole 
way to enter a market altogether closed and with a 
view to furthering future opportunities. 

Automotive Industry Examples 

Another interesting case of transfer of technology 
to subsidiary companies tightly controlled by the 
parent company may be found in the automotive 
industry. I remember, from my experience, the 
rather chaotic creation of the automobile industry in 
Latin America. When the local governments gave a 
more or less indiscriminate green light, all the inter- 
ested parties jumped into a competitive struggle to 
enter those markets, with questionable benefit for 
either the host countries, the companies, or finally 
the customers, because of the splinter industries 
which resulted from this free-for-all. 

Only in the case of the American and European 
motor car manufacturers (General Motors, Ford, 
Volkswagen and Fiat) which established wholly 
owned or strictly controlled subsidiaries was the 
transfer of technology satisfactory. In most of the 
other cases, if I am not wrong, the experience has 
been on the whole extremely poor, which confirms 
the limitations I mentioned above. 

As for the recipient countries, they received no 
doubt an injection of a good dose, perhaps an over- 
dose, of modern technology, which could not be 
readily absorbed and will require a rather long peri- 
od of internal adjustments. In fact the intrusion of 
this most complex industry has caused some severe 
dislocations in the unprepared economic fabric of 
those countries which in turn proves, once more, 



that the transfer of technology is optimal among 
countries with a compatible level of overall develop- 
ment. 

We may conclude that, although private enter- 
prise is the central element of development in the 
market economies of the Western countries, it can- 
not be counted on as the exclusive factor for the 
international transfer of technology. Our corpora- 
tions must live up to the rules of competition. This 
very fact limits their willingness to transfer tech- 
nologies to other companies. 

As I mentioned before, the tremendous invest- 
ments required by modern R&D causes any com- 
pany to be extremely reluctant to transfer to others 
its advanced technology, prior to its full exploitation 
by the company itself, either in the home market or 
through direct industrial operations abroad. Also, 
there are other limiting factors. 

I am therefore afraid that the open market for 
technologies, though representing an efficient and 
fertile exchange medium, is not broad enough to 
cause the international technological flow to happen 
at the speed and in the measure which is nowadays 
required. 

In our rapidly changing world we should not feel 
bound by traditional and established yardsticks. As 
in the case of domestic basic research programs, 
funded and handled by public agencies and academ- 
ic institutions, also for the international exchange of 
basic and applied technology, a new, imaginative ap- 
proach should be devised, whereby private ways and 
means may be supplemented by intra-government 
arrangements. This point was abundantly and mas- 
terfully touched upon last night and this morning. 
Highly provocative thoughts and questions were ad- 
vanced. 

We have come to a point where action and 
answers and remedies are required, both at the na- 
tional level and in Europe. Some agonizing reap- 
praisals are needed in mentality, attitude, education, 
environment and policies also, with the assistance of 
the U.S. and at an international level as well. 

A Plan for International Cooperation 

The plan for technological cooperation recently 
proposed by the Italian government is meant as a 
contribution in this direction. This plan calls, in the 
first phase, for the signature of a technological 
agreement between the governments of the NATO 
countries with the possibility for other governments 
to join at a later date. To reach such an agreement, 
the interested government should first of all sub- 



131 



scribe to a joint political declaration of intent in this 
vital area, and then call on a special conference to 
lay the basis for a unified European technological 
organization which, in turn, may pave the way for a 
true cooperation, as more or less equal partners, 
with the United States. Prime Minister Wilson re- 
cently outlined a somewhat similar proposal. 

The technological organization should promote 
initiatives, agreements and infrastructures in Europe 
necessary to foster European technological develop- 
ment for the next ten years. The plan also suggests 
that European and U.S. cooperation may start with 
a project-by-project approach, as indicated in Presi- 
dent Johnson's proposal in relation to the possible 
common endeavor by Europe and the United States 



in the Jupiter project. This proposal implies the ac- 
quisition by European countries of U.S. technology, 
without charge in the case of Government-owned 
technology, and through payment in the case of pri- 
vate patents. 

The Italian plan is now under study and I under- 
stand it will be examined by the Council of Minis- 
ters of the NATO countries this December. I fer- 
vently hope that this and other means will be 
devised and implemented so as to assure a two-way 
flow of technology across the Atlantic, consistent 
with the vital requirements of a homogeneous devel- 
opment and transformation of the U.S. and Euro- 
pean societies. 



5S33S38SS3S3SSS 



QUESTIONS FROM THE FLOOR 



Professor Chenery: Both of our speakers have re- 
ferred to the quality of "appropriateness" in the 
technology to be transferred. I would like to point 
out that the total capital investment in all underde- 
veloped countries, comprising nearly a billion and a 
half people, is less than the total annual capital in- 
vestment in the United States. The need to econo- 
mize on investment embodying any new technology 
is obviously enormous. The capital invested per 
worker in underdeveloped countries is now one 
tenth or one twentieth of what it is in the United 
States. 

Of course, this does not mean that each industry 
in an emerging country has to be designed so that it 
uses only a small proportion of capital, but it does 
mean that only a very small number of sectors in 
such economies can be equipped with the capital- 
intensive technology to which the U.S. and Europe 
are accustomed. 

Let me suggest that we think about the relations 
among economic sectors. It is probably efficient to 
have a small number of sectors, even in quite primi- 
tive countries, that do have the latest technology, 
provided they fit into the environment, as Dr. Rah- 
man proposed. Fitting into the environment may 
mean that the construction industry which builds the 
buildings might employ completely unautomated 
means, because that can be done efficiently under 
these circumstances, whereas the machines which 
operate in the buildings might be of the latest de- 
sign. 



The advanced countries have to figure out, some- 
how, how to transfer technology to underdeveloped 
countries, even though it is not always the same 
technology which they are using themselves. This 
problem is probably relatively easy to solve techni- 
cally, if somebody were willing to finance even a 
half-billion dollars worth of R&D on designing ap- 
propriate technology for India or Pakistan or other 
countries at that level of development. The princi- 
ples are known; the trouble is there is no ready way, 
even though the technology would itself be profita- 
ble once it is established. There is not now a mecha- 
nism which brings together the resources in the pri- 
vate sector with the users in the private sector. This 
is the gap which has bothered governments and the 
economists for a long time. The profitable interna- 
tional transfers are going to take care of only a 
small part of the problem. Let me invite a few com- 
ments on this from the audience before we turn to 
our formal discussants. 

Mr. Wionczek: It may be of interest to this session 
of the Symposium to know some preliminary results 
of a study prepared recently by me for the United 
Nations Secretariat on the subject of the transfer 
of technology to the developing countries through 
enterprise-to-enterprise arrangements. This case 
study dealt explicitly with issues arising in Mexico, 
a country which, because of its very satisfactory 
economic performance in the past two decades, is 
considered today semi-industrialized. 



132 



A cursory survey of the local scene discloses that, 
at the present state of Mexico's industrialization 
involving implementation of heavy and intermediate 
industries, technology imported from abroad is of 
crucial importance. This foreign-originated technol- 
ogy flows not only from foreign private enterprises 
to private enterprises in Mexico, but also to firms 
fully owned by the State or with minority public 
capital participation. 

The massive transfer of foreign technology to 
Mexico and the growing size of payments for these 
transfers led to the feeling, which is spreading 
throughout the country, that because of the fact that 
Mexico cannot afford in the long run to finance the 
cost of technology acquired abroad through tradi- 
tional enterprise-to-enterprise channels, some new 
arrangements in this field will have to be devised. 
The present debate in Mexico runs along the follow- 
ing general lines: 

The country cannot afford to abandon its objec- 
tive of rapid absorption of new technology and to 
use "second-hand" know-how because of longer term 
development considerations — especially the need to 
diversify exports. 

For political reasons, Mexico cannot permit the 
complete technological domination from abroad 
through arrangements tying up new technology to 
private foreign investment exclusively. 

Both for political and economic considerations, 
foreign private capital should plan gradually to with- 
draw, in agreement with other countries, from indus- 
trial activities in which technology is relatively stable 
or where there is ready access to non-proprietary 
know-how that may require no more than advisory 
services to the local capital replacing the foreign- 
controlled investment; 

On the same grounds, foreign capital should con- 
tribute to the development of local applied scientific 
research in areas of dynamic technology; 

Moreover, the cost of foreign technology to 
Mexico must be lowered through external financial 
assistance and general liberalization of conditions 
under which technical services and licensing and 
engineering agreements are negotiated between for- 
eign owners of technology and Mexican private and 
public enterprises. 

The position described above seems to imply many 
legitimate grievances of a rapidly industrializing 
society which faces technological power of the more 
advanced countries and whose dependence upon 
foreign technology continues to increase. 

During my interviews with state officials in charge 



of industrialization, experts engaged in technological 
research and executives from industrial enterprises, 
opinions were heard that a relatively limited relation- 
ship exists between the nature of transferred tech- 
nology and modalities of the transfer itself. The 
picture which emerges is rather that the problems 
of transfer are more closely related to the intensity 
of technological change and the respective size of 
local firms receiving technology from abroad. 
Another important element is considered to be the 
existence or absence of corporate links between the 
foreign owner and domestic receiver of technology. 
Large state-owned or controlled enterprises in 
Mexico do not seem to face any major problems in 
respect to acquiring adequate technology from 
abroad. Larger domestic-owned private corporations 
in Mexico seem also to show a growing ability to 
shop for available technology around the world and 
especially to discern between patented know-how 
available only through license agreements and non- 
proprietary technology. Unless the purchases of 
technical know-how are tied to purchases of capital 
equipment through medium or long-term export 
credits, these larger enterprises follow the strategy 
of diversifying their sources of know-how through 
entering into separate agreements on designing and 
construction of production facilities, on technical 
services covering provision of technical information 
and on licensing agreements covering patented 
knowledge. Very often these large enterprises hire 
international consultants of great prestige for the 
purpose of feasibility studies and ask them later on 
to act as advisors on choice Of foreign technology 
and its sources. 

The situation is very different and more difficult 
in the case of small and medium-sized industrial 
enterprises in Mexico. They face practically only two 
alternatives: (a) buying packaged technology abroad 
in the form of a plant which incorporates the design 
and construction of facilities and patented know- 
how and technical services; or (b) following the 
strategy of larger enterprises by negotiating separate 
agreements with foreign technology owners at differ- 
ent levels. Because in Mexico both the state and 
private manufacturers of capital goods are unequivo- 
cally opposed to importation of packaged plans, a 
small or medium-sized industrial enterprise finds it 
very complicated and often very expensive to acquire 
new technology from abroad. Normally, it finds it 
necessary to make a single arrangement with a 
foreign firm having access to all phases of technology 
required and not available from within the country. 



133 



This last choice inexorably leads to corporate links 
which many small and medium enterprises try to 
avoid in fear of the undue degree of control by the 
foreign partner. 

These are some of the preliminary findings of my 
survey. They point out a need to start much 
broader research on this subject, possibly with par- 
ticipation of experts from both the developed and 
the developing countries. The U.N. Fiscal and 
Financial Branch will undertake such pioneering 
studies in 1967. The issue itself has a high political 
content and may become within a short time a source 
of considerable friction between the owners of new 
technology and the developing countries. 

Professor Rey: I am scientific advisor of Nestle- 
Alimentana Company of Switzerland. I wish to add 
to what has been said this morning on the techno- 
logical gap. I believe that there is not only a tech- 
nological gap between Europe and the States, but 
also a technological gap between Europe, the States 
and the Far East. 

Nevertheless, in our own particular case, we have 
gained a lot by establishing close connection with 
Japanese companies and with American companies. 
Besides, we have a subsidiary research establish- 
ment in the States, and for that reason have elimi- 
nated any technological gap between the European 
operations and the American operations of the same 
European company. 

As far as Nestle is concerned, we are involved 
in manufacturing and sales in more than 100 coun- 
tries, and we have research establishments in several 
places in Europe as well as in the States. However, 
when we are faced with a need for very specialized 
types of technology, such as when we became inter- 
ested in radically new sources of food for the future, 



we went out to find partners who could give us the 
technology and the know-how in their specialized 
fields. It was announced last July that Nestle entered 
into a joint venture with a company in New Jersey 
— a typical case where two big companies with com- 
mon interests in a given field can complement each 
other's know-how. This, in my opinion, is one of 
the best kinds of enterprise-to-enterprise agreement; 
they are non-competitive and complementary. 

Dr. M. Kersten: I am the President of the Physikika- 
lisch-Technische Bundesanstalt of Braunschweig, 
Germany, and I would like to make a remark 
about the international transfer of technology by 
national standards institutes. Perhaps my colleagues 
at the National Bureau of Standards are too modest 
to speak about it. All these national institutes are 
increasing their cooperation, especially with the 
developing countries. Some cooperation has been 
in effect, as in our case, since the beginning of this 
century. 

I would like also to remark about the role of 
fundamental measuring devices, as a means to trans- 
fer of technology. It is very important at the start 
of the industrialization of a developing country to 
provide a modern measurement system and stand- 
ards, including the newest methods. Sound measure- 
ments lead to sound industrial and social life. The 
national standards institutes must see that education 
toward this point of view is their common duty. I 
will add only that collaboration among all the 
national institutes should be encouraged. The 
United States, Canada, and the United Kingdom, 
Germany, and so on are already doing so. This 
is a vehicle for the transfer of technology which 
extends way beyond fundamental units and measur- 
ing methods. 






134 




JOHN H. DESSAUER is Executive Vice President of the Research and Advanced 
Engineering Division of Xerox Corporation, and Vice Chairman of the Board of 
Directors. First joining the research department of Agfa Ansco Company when he 
came to the United States in 1929, he became associated with the Rectigraph 
Company in 1935, shortly before it was purchased by the Haloid Company, fore- 
runner of Xerox. He established the research department there, engaged in a 
search for new products and, together with Joseph C. Wilson, explored the xero- 
graphic (electrophotographic) process when it was publicized in 1945. The re- 
search effort which Dr. Dessauer now directs for the Xerox Corporation is the 
outgrowth of the Haloid Company's research established by him in 1938. 

A native of Aschafjenburg, Germany (1905), Dr. Dessauer, after receiving his 
early education there, went on to the Albert us Magnus University in Freiburg for 
Liberal Arts studies. He then received the equivalent of a B.S. degree in chemical 
engineering from the Institute of Technology in Munich, followed by his Masters 
and Doctors Degrees in engineering sciences at the Institute of Technology in 
Aachen, Germany; both cum laude. 



Professor Chenery: Thank you very much. I think 
we should now turn to the first of our formal dis- 
cussants, Dr. John Dessauer, who is Executive Vice 
President of the Research and Advanced Engineer- 
ing Division of the Xerox Corporation. 



Dr. Dessauer: With your permission, I would like to 
limit my comments to the experience of Xerox Cor- 
poration, since I feel that I must disqualify myself as 
an expert in this complex situation of technology 
transfer. 

Required Characteristic for Successful Transfer 
of Technology 

Now in our experience, the transfer of technology 
must have one very important characteristic in order 
for it to be successful. It must be mutually 
beneficial. It cannot be like a blood transfusion, 
where the donor does all of the giving and the re- 
ceiver gets all of the benefits. It is true that relation- 
ships like that can exist, and it is also true that most 
lay people and, in fact, most taxpayers think of 
technology transfer in those terms. 

But, it has been the experience of those of us who 
work in this field of industry that in order to be 
viable a relationship must benefit both parties — the 
transferor and the transferee. Perhaps I can illus- 
trate such a viable, mutually beneficial relationship 
by telling you how Xerox approached the problem 
of Technology Transfer through an enterprise-to-en- 
terprise arrangement. 

Formation of Rank Xerox Ltd. 

In 1956 we formed an affiliated company, Rank 
Xerox Ltd., with The Rank Organisation of England 
as our partner. This company was formed to take 
advantage of our technological development and 
patent position and also to utilize the assets which 
The Rank Organisation had to offer. These assets 
included not only money but also experience in in- 
ternational distribution and services. Xerox invested 
technology in the form of know-how and patents. 



The Rank Organisation invested money, internation- 
al operating management and manufacturing and 
distribution capabilities. The profits are shared on a 
50-50 basis up to a datum point. Beyond this, Xer- 
ox Corporation receives two-thirds of the profit. The 
datum point can be changed according to the capital 
invested by Rank. Based on this agreement, Xerox 
Corporation does all research and development 
work and transfers the results, subject to all U.S. 
regulations, to the British-affiliated company. 

The British Rank Xerox, in turn, followed this 
same pattern and set up a Japanese company jointly 
owned with Fuji Photo Film under the name of Fuji 
Xerox. 

Mechanics of Technology Transfer 

During the ten years following 1956, Xerox trans- 
ferred the technology it applied to the development, 
design and manufacture of such machines as the 
Copyflo, the 914 and 813 copiers and the 2400 
copier/duplicator. 

This transfer was accomplished in the form of en- 
gineering drawings of parts and assemblies, manu- 
facturing fabrication and assembly process instruc- 
tions, consumable material formulations and 
specifications as well as product service procedures 
to be used by the technical sales forces. We are for- 
tunate that, in our field, the same products identified 
for our national U.S. market have to date qualified 
for international usage, and we foresee that this will 
continue. In the past, a certain amount of adapta- 
tion (Anglicize and Nipponize) for English and Jap- 
anese requirements had to be accomplished. With 
new products on the drawing boards at the first 
stages of development now, we are trying to come 
up with a design which will fit the world-wide re- 
quirements. This is accomplished by giving our Brit- 
ish and Japanese associates a voice in the selection 
and specification-writing of new programs as well as 
having representatives of the affiliated companies 
as part of the technical development and design 
teams in Rochester when we get under way. 

Our experience has been a most happy one. The 
only serious problems have arisen from the need for 
more international standards, since Japanese System 
is based on the "CGS" system, and we here use the 
inch and ounce approach. 

Perhaps the best way to confirm my claim for a 
very successful experience of technology transfer 
would be to state a few figures. 



136 



Results of Technology Transfer 

Rank Xerox Limited has grown from 1956 to the 
present, to a company with manufacturing plants in 
three locations in England, one in Holland and, 
through the affiliated Fuji Xerox, with three plants in 
Tokyo. It has developed distribution and service fa- 
cilities in 20 countries and territories, and the annual 
growth for the fiscal year ending in June 1966 has 
reached the 124 million dollar level. This made 



Rank Xerox one of the hundred largest companies 
in Europe in less than 10 years. 

By comparison, Xerox Corporation's sales have 
grown during this same period from 24 million dol- 
lars to over 393 million dollars last year and to an 
annual rate of over 500 million dollars this year. 

You may recall that I started out by saying that 
for a transfer-of-technology relationship to be suc- 
cessful, it must be mutually beneficial. The above 
figures give evidence of the fact that this has been 
just such a relationship. 



137 



Professor Chenery: Whether by accident or design 
in the programming, all three of our formal dis- 
cussants have transferred technology from Europe 
to the United States. Our last two are both Dutch- 
born U. S. residents. Dr. Soutendijk, who will com- 
ment now, is Manager of Brown Bros. Harriman 
and Company. 



Dr. Soutendijk: Not having a company with experi- 
ence in the field of technology to discuss, I hope 
that you will permit me to make some general re- 
marks about the technological gap between Europe 
and the United States. I want to limit these remarks 
to some economic and financial points which might 
contribute to a discussion later. 

Nature of the U.S. — Europe Gap 

I have been trying to find out for myself why 
there is a gap and what kind of circumstances in the 
economic and financial field have contributed to this 
gap. Like Mr. Peterson this morning, I came to the 
conclusion that technology is done by the large com- 
panies. We have figures from the International 
Chamber of Commerce, according to which 60 to 
90 percent of all the research is done by large firms. 
For Holland some rather typical figures have been 
developed — 80 percent of the research is done by 
companies with more than 1000 employees, and 65 
percent of this 80 — or 52 percent of the total — is 
even done by five large companies. 

Concentration of R & D in Large Firms and 
Large Countries 

This brings us immediately to the point of con- 
centration. Concentration of businesses we see in 
Europe at the moment, on a large scale in many 
countries. It is stimulated — in the first place — by the 
Common Market and— in the second place — by the 
governments of different countries. 

We all know the case of France, where it is gov- 
ernment policy to stimulate concentration. We have 
seen a report about it from the German Govern- 



ment. We have seen a similar "White Paper" from 
the Dutch Government and another from the Com- 
mon Market Commission.* 

This concentration in Europe is in full swing and 
will, after some time, show results as far as technol- 
ogy is concerned. I have to make the restriction that 
so far it is only done on a national basis. We don't 
see concentration of businesses in different countries 
as yet, and so there is still much to be desired. But 
it is a step in the right direction, hopefully leading to 
a smaller "Imbalance of Technology" between the 
United States and Europe. 

Need for Larger Markets 

The next thing that is needed in Europe is larger 
markets. Here, something is being done already. The 
duties in the Common Market and the duties be- 
tween the EFTA countries have been brought down 
to a large extent, but there are still other barriers, as 
the negotiators in Geneva, for the Kennedy Round, 
have experienced. 

Although some measures have been taken, there 
is still a long way to go before Europe will be as 
large a market as the United States is. 

Need for Capital 

Another point is that there is capital required. In 
order to acquire the technology which the United 
States has, Europe can buy it or it can develop tech- 
nology itself. Developing it is ordinarily more expen- 
sive than buying. Also, you don't have the risk of 
mistakes when you buy it, and it is probably a sim- 
pler way, but it requires capital. 

Here we come to the strange phenomenon that in 
Europe there is enough savings — we have seen be- 
fore the Interest Equalization Tax that most of the 
European issues floated in New York were bought 
by European capital. We have also seen, as reported 
in a recent publication of the Atlantic Institute in 
Paris, that there is a remarkable balance in amounts 
invested by Europe in the United States as com- 
pared to the amounts invested by the United States 
in Europe. But there is a difference in composition; 
European investments in the United States are most- 



* References — 
Bericht ueber das Ergebnis einer Untersuchung der Konzentration 
in der Wirtschaft. 

Sent by Chancellor Ludwig Erhard to the President of the German 
Bundestag on June 5, 1966. 

Enige Gegevens over de Concentratietendens in het Bedrijfsleven. 
Sent by State Secretary J. H. Bakker to the President of the 
Netherlands Tweede Kamer der Staten-Generaal on January 7, 
1966. 

Le Probleme de la Concentration dans le Marche' Commun. 
Prepared by the EEC Commission, Brussels, December 1, 1965. 



138 




L. R. W. SOUTENDIJK is Manager of Brown Brothers Harriman & Company, 
commercial banking, investment counsel and brokerage firm of New York. From 
1946 to 1959 he served as Financial Counselor to the Netherlands Embassy in 
Washington. 

Dr. Soutendijk was educated at the Rotterdam School of Economics, from 
which he received his Doctorate in Economics. 

Dr. Soutendijk is currently President of the Netherlands Chamber of Commerce 
in the United States and Vice President of the Netherland- America Foundation. 
He has served as a member of the Netherlands Delegations to the Reparations 
Conference in Paris in 1945 and to the inaugural meeting of the International 
Bank for Reconstruction and Development and the International Monetary Fund 
in Savannah, Georgia in 1946. In 1945 and 1946 he was Secretary, Economic and 
Financial Division of the Netherlands Military Mission. He was alternate Executive 
Director of the International Bank for Reconstruction and Development during the 
period 1952 to 1954. 



256-707 0-67— 10 



ly portfolio investments; American investments in 
Europe are mostly direct investments, bringing 
ideas, techniques and processes to Europe. So even 
when there are sufficient savings in Europe these are 
not directed to improve technology. 

Need for More Coordinated Capital Markets 

This brings me to capital markets. The study of 
the Atlantic Institute mentioned that there are a 
number of shortcomings as far as the capital markets 
in Europe is concerned; of these the separation of 
the different national capital markets is a most im- 
portant one. 

We should have — there should be — a European 
capital market, and to promote this there should be 
a harmonization of law and taxes in general. The 
Common Market Commission is moving in this di- 
rection but, also here, there still is a long way to go. 

There is a kind of transfer of know-how in con- 
nection with capital markets, and I might point out 
that the World Bank has for years been trying to 
assist in the development of capital markets in the 
developing countries. I might also point out in this 
respect that American banks have been going and 
are still going to establish themselves in Europe, in 
one form or another; this definitely will contribute 
to the foundation of capital markets over there. And 
in the third place I want to mention that a large 
American chemical company has taken an interest 
in a Dutch bank, a couple of years ago, in order to 
participate in the European money market, and has 
recently established a bank in Zurich to be active in 
the European capital market. So there is some 
transfer of know-how in the field of capital markets. 

Old Attitudes About Exports of Technology & 
Capital 

I would like to touch on the attitude which the 
different countries can take with regard to interna- 



tional investments. We have not too long ago, and I 
think it was Mr. Cooper who mentioned it yester- 
day, seen that there was a time that countries didn't 
want to export capital, they didn't want to export 
technology. A very interesting article in the Federal 
Reserve Bulletin in 1950 quoted a German publica- 
tion of 1907, under the title, "Is Export of Machin- 
ery Economic Suicide"? 

When we look at the United States as the major 
country that is supplying technology, we can state 
that here there is no concern in this respect what- 
soever. The United States never has had any objec- 
tion against these exports and the United States 
doesn't have to. The article in the Federal Reserve 
publication gives as explanation the composition of 
the United States exports, which are not endangered 
by industrialization since U.S. export articles are 
geared to increase production or are required by an 
expanding consumption. And the same goes for the 
industrial raw materials exported by the United 
States. In this connection we should remember the 
well-known fact that industrial countries are usually 
each others' best customers. 

This brings me to the attitude which the receiving 
countries have towards foreign investments. We 
have seen some remarkable changes. We have seen 
for instance, the French government opening an 
office in Paris in 1959 to attract American invest- 
ments and closing this office in 1964. France is now 
more interested in exporting capital to the United 
States than in attracting capital to France, except 
when it is connected with technology, with the 
transfer of technology, or with research in France 
itself. 

In view of the late hour, I shall limit my remarks 
to this. Maybe we will have an opportunity to come 
back to these issues in the future. 






140 



Professor Chenery: The third discussant is both a 
scientist and a manager of a technology-based enter- 
prise. Dr. Knoppers is President of Merck, Sharp 
and Dohme International. 



Dr. Knoppers: As a closing speaker I am in a some- 
what difficult position because everything that I 
wanted to say has been said, and — even worse — it 
has been said better than I could do it. 

The Key Element: Superior Management 

I am very grateful that I had three industrial 
speakers before me who stressed the point which 
has been made to this conference since the opening 
remarks of Secretary Connor until now. We see 
clearly again that their three companies were suc- 
cessful because they had superior management 
which created the technology they wanted, and this 
inter-action between management and technology, 
with its feedback, is essential for technological 
progress. 

The story of Merck in this field started in the 
early 30's. The late Mr. George Merck, president of 
the firm, was dissatisfied with the progress of phar- 
maceutical developments. The industry couldn't at- 
tract the right people of imagination and capability, 
so he made a management decision. He asked the 
advice of some of his friends outside the industry. 
This was something which Mr. Petersen alluded to 
this morning when he talked about cross-fertiliza- 
tion. A modern industrial manager must understand 
other fields of life: government, economics and 
science. Mr. Merck consulted several outstanding 
scientists and he spoke to presidents of universities. 
And as a management decision, again, his company 
created laboratories in which basic research was 
combined with objective, directed research with a 
broad latitude of freedom. The tradition of Mr. 
Merck has been followed up and expanded by his 
successors, and I think this approach is the real 
source of the success of innovation in drugs by an 
American company. 



Indeed, I believe deeply that the broadening of 
the attitude of management towards technological 
development is essential. And I can possibly feel it a 
little more acutely because I'm a product of two 
worlds, one in which interplay between industry and 
science is utilized fruitfully and an older world 
where this is less often true. Yet I think we would 
do well to ask ourselves where the basic differences 
in attitudes lie. 

Willingness to Exchange Experiences 

The first difference is that American management 
stimulates a freer exchange of experiences, and a 
freer exchange of experiences means competition. If 
you hear how others do it and how well they do it, 
you want to do it as well, or better. 

Looking for Uses for Scientific Findings 

The second difference, I think, is that in the Unit- 
ed States the drive of management to find applica- 
tions for basic findings is fierce — I sometimes call it 
ferocious. It's the habit of thinking immediately and 
eagerly: "What can I do with basic findings? What 
basic needs can I fill with them?" In my own field, 
the pharmaceutical field, the British biologists and 
pharmacologists had a complete lead in the physiol- 
ogy of nerve transmission, a very essential part of 
physiology, with great clinical implications. But it 
became such an obsession in many of their universi- 
ties they forgot to develop a satisfactory number of 
application-minded pharmacologists. 

Providing Management Talent in Depth 

The third difference in my opinion is that, except 
on the higher level, the level of Dr. Peccei and 
others in Europe, there is a management gap. In the 
United States there are many more good research 
directors, both in the giant companies and among 
smaller competitors. And, I think, here is a chal- 
lenge for Europe to improve its performance. I 
think that from the management point-of-view, 
Europeans generally should give more attention to 
application and they should really try to develop 
better professional long-range planning, both in 
function and the development of people. One appli- 
cation of this attitude was referred to this morning 
by Mr. Peterson, when he spoke about those small 
companies, the entrepreneurs, that come up and 
really are pioneers for the big companies. The 
leaders must keep completely awake because they 
could be overtaken at any time by competitors with 
new concepts. 



141 







ANTONIE T. KNOPPERS is President of Merck, Sharp & Dohme International, a 
world wide manufacturer of pharmaceuticals and chemicals. From 1950 to 1952 
he was Professor of Pharmacology at the Free University of Amsterdam, following 
which he was appointed Manager of Medical Services in the international opera- 
tions of Merck and then Director of Medical Services for Merck, Sharp & Dohme 
International. He became Director of Scientific Activities for that division in 1955 
and the same year assumed the Vice Presidency and General Management. He 
assumed his present position in 1957. 

A native of the Netherlands and now a citizen of the United States, Dr. Knop- 
pers received his Doctor of Medicine degree from the University of Amsterdam 
and his Doctor of Pharmacology from the University of Leyden. 

Dr. Knoppers has authored some 60 scientific papers in the fields' of pharmacol- 
ogy and endocrinology . 



Rewards for the Entrepreneurs 

I think that Europe could improve its perform- 
ance with better tax laws. We complain about the 
tax laws for our entrepreneurs. But in some Euro- 
pean countries, if an entrepreneur would put his 
capital to risk and make a million dollars, he would 
lose virtually all in taxes, then or later. For instance, 
Great Britain has not followed through with re- 
search and development although it has had the ini- 
tiative in many technological basic ideas — vertical 
aircraft, to mention one example. A country that 
does not reward its entrepreneurs — entrepreneurs 
that dare to take risks — is in trouble technologically. 

Using a Technological Advantage on a World- 
Wide Basis 

And another possibility is the one that Dr. Peccei 
mentioned. This is the role, the "world-wide" atti- 
tude, of firms such as IBM, Olivetti, Xerox, Merck 
— I mention only those who stand here on the plat- 
form. They establish themselves everywhere. Theirs 
is an example of a management attitude that re- 
mains enormously important. I would venture a 
suggestion: in the pharmaceutical field our main 
competitors are three or four big firms based in 
Switzerland, a small country. So the question of 
home-country size doesn't play a crucial role, if the 
company specializes, invests and reinvests in re- 
search and above all has a world-wide approach. 

The Positive Values of a Technological Gap 

I feel that basically it is in the interest of the 
United States that we maintain a technological ad- 
vantage: that we transfer more technology out than 
we take in. This protects the balance of payments 
and contributes to the balance of trade. Through 
payments made for licenses and royalties, and 
through exports of technologically advanced prod- 
ucts, a vital contribution is made. 

Therefore, I feel that the technology-based 
American companies should be good traders; they 
should really use their technology to earn money for 
this country. 

Although I'm thoroughly prepared to be sympa- 
thetic with the general aims of the Italian (Fanfani) 
plan, especially since it recognizes the need for bet- 
ter technology, I would be very much against weak- 
ening our attitude to the exploitation of technology 
without sound payment. I'm simply surprised at the 
suggestion that United States government research 
and government technology should be given freely 
to Europe at the moment we are in some difficulties 



with the balance of payments. To give away the tax- 
payers' money — as represented in the value of gov- 
ernment patents — to European countries which are 
affluent, would, I think, be the opposite of wisdom. 

While I consider it useful, on the one hand, that 
there is a gap, I am convinced that the gap must 
remain manageable (and there I am very sympathet- 
ic to the ideas of Dr. Peccei). Should the gap be- 
come unmanageable, it could lead to a chain reac- 
tion of undesirable consequences. It could make 
technology too expensive for Europe to buy; it could 
create protectionism, and it could encourage curtail- 
ing of direct investment — all of which runs counter 
to our nation's need, which is a Europe where we 
can sell to an affluent, sophisticated society. And it 
would be against the interest of Western Europe it- 
self, as it is a move backwards. But, as I said, I 
don't think we have reached this unmanageable 
stage yet, and Europe has been alerted. 

Technology for the Developing Countries: Can 
We Help? 

I see the problem of technology in less developed 
countries in a different way. It is quite clear to me, 
especially after what we heard from Professor Rao 
and Dr. Rahman, that this problem is not solvable 
with the present means. Still, we have it in our 
hands, I think, through technology, to solve prob- 
lems of underdeveloped countries; the methods to 
apply this technology with maximum effectiveness 
are yet to be found. A very broad systems approach 
could be the theoretical solution. But political and 
emotional problems within less developed countries 
hamper the implementation. It is a problem of ma- 
jor magnitude! 

Dr. Seitz yesterday referred to man in terms of 
his evolution as a user of tools: homo faber. It 
seems that we face some difficulties in finding out 
how we can use our present tools — not only in the 
problems less developed countries have, such as 
population control, food supply, et cetera, but with 
our own problems as well (air pollution, slums 
et cetera). We have to ask ourselves whether man is 
equipped in the evolutionary process to handle those 
tools with wisdom. It means, negatively, can we con- 
trol our emotions, can we harness our aggressions 
and territorial compulsions? Positively, will we men 
be wise? 

In other words is this technical man a homo sap- 
iens? That's possibly the question. 
Professor Chenery: Thank you, we now conclude 
this part of the Symposium. 



143 



CLOSING REMARKS 




Secretary Connor: What has happened here in these 
two days indicates the complexity of the relation be- 
tween technology and international trade, the com- 
plexity of the problems attendant upon the transfer 
of technology from one country to another, from 
one industry to another, from one company to 
another, from one government institution to another. 

Our friends on the platform and in the audience 
have delineated some of these problems, particularly 
as applied to the transfer of technology from devel- 
oped nations to underdeveloped nations. We now 
have to break down the general problem into its var- 
ious component parts. The problems attendant upon 
the transfer of technology from an agency of the 
United States Government to a private firm in Mexi- 
co are obviously different from the problems that 
are associated with the transfer of technology from 
Olivetti, in Italy, to Olivetti-Underwood in the United 
States. The reverse follows. It is also different in 
a situation involving a private firm in the United 
States with a competing firm in Great Britain. 

The problem of competition needs to be stressed 
somewhat more than it was during the formal pro- 



gram. In our system, after developing new technol- 
ogy using stockholder money, it just isn't feasible 
for a corporation to give that away without ade- 
quate consideration. The adequacy of the considera- 
tion can vary from case to case, but there must be 
some return on the technology that represents an 
investment of stockholders' money. Then, the point 
made about the transfer of technology developed 
in the public domain, involves quite a few special 
problems. Most of that technology gets into the 
literature and is available to the public on a world- 
wide basis. However, the actual transfer of the 
know-how involved requires additional expense for 
travel of skilled people, for example; this additional 
cost might have to be justified to the Appropriations 
Committees, as one example. 

This symposium, in many respects, has been an 
eye-opener, certainly for me and perhaps for some 
of you. For one thing, I have a completely broad- 
ened view of the question of the "technological 
gap." The fact that so many people have talked 
about the differences in the managerial competences, 
attitudes and techniques is of considerable impor- 
tance. We are left with the conclusion that an 
important element in the so-called technological gap 
consists of what could be called a managerial gap, 
and this is surely something that would have to be 
given more attention in the future. In the discussion 
this afternoon, we get on the question of the gap in 
capital resources; in any further consideration of 
this problem, this element has to be explored in 
greater detail than it has heretofore. 

In thinking about what has transpired, I come up 
with an analogy. It seems to me that we can view 
technology as a vehicle of progress, with managerial 
skills in the driver's seat, incentives as the fuel, and 
the road paved with capital resources. These are 
certainly the important elements and make me come 
back with renewed emphasis to the importance of 
the management factor. If the management of tech- 
nology is as important as stated in this two-day ses- 
sion, then we should take definite steps in all the 
countries to do something about the lack of trained, 
highly motivated people with managerial skills, who 
are willing to try to make technology work for the 
benefit of mankind. That is the final thought that I 
would like to leave with you, because that is really 
the objective of our endeavors — to improve the con- 
dition of mankind. Thank you all, very much. 



144 



List of 


Participants 


in the Symposium 


Ibrahim Helmi Abdel-Rahman 






Harry C. Anderson, President 


Commissioner for Industrial Development 






Business Equipment Manufacturers Assn. 


United Nations 






New York, N.Y. 


New York, N.Y. 






Rolf Andreasson 


Colonel William M. Adams, President 






Scientific Attache 


Sprague International Ltd. 






Embassy of Sweden 


North Adams, Mass. 






Washington, D.C. 
W. E. Andrus, Jr. 


Azmi Ahmed Afifi, Chief 






Group Director of Standards 


Industrial Institution Section 






IBM Corporation 
Armonk, N.Y. 


Center for Industrial Development 






United Nations 








New York, N.Y. 






M. D. Archangeli 
Director of Planning 


William H. Aiken 






Eaton Yale and Towne Inc. 


Vice President for Research & Development 






Detroit, Mich. 


Union-Bag Camp Paper Corporation 








New York, N.Y. 






Dr. George T. Armstrong 
National Bureau of Standards 


Samuel N. Alexander 






Washington, D.C. 


National Bureau of Standards 








Washington, D.C. 






H. C. Armstrong 
Embassy of Canada 
Washington, D.C. 


D. Jaime MacVeigh Alfos, Vice President 






Tecnatom, S.A. 








Madrid, Spain 






Dr. Allen V. Astin, Director 






National Bureau of Standards 








Washington, D.C. 


Dr. Harry Allen, Jr. 








Bureau of Mines, Dept. of Interior 






L. A. Atwell 


Washington, D.C. 






National Aeronautics & Space Administration 
Washington, D.C. 


Dr. Franz L. Alt 








National Bureau of Standards 






George E. Auman 


Washington, D.C. 






National Bureau of Standards 
Washington, D.C. 


Dr. Ernest Ambler 








National Bureau of Standards 






Dr. Walter Baei 


Washington, D.C. 






Office of the Vice President 
The White House 
Washington, D.C. 


William G. Amey 








Leeds & Northrup Company 






Henri Bader, Scientific Attache 


Philadelphia, Pa. 






Department of State 
Washington, D.C. 


Dr. Costas E. Anagnostopoulos 








Director of Research, Organic Chemicals Division 




Dr. W. O. Baker, Vice President 


Monsanto Chemical Company 






Bell Telephone Laboratories 


St. Louis, Mo. 






Murray Hill, N.J. 






14! 


A 



Dr. Lajos Banlaki 
Deputy Commercial Counselor 
Hungarian Legation 
Washington, D.C. 

Donald W. Banner 
General Patent Counsel 
Borg-Warner Corporation 
Chicago, 111. 

Jenaro Baquero 
Secretary of Commerce 
Commonwealth of Puerto Rico 
Santurce, P.R. 

Henry Barbour 
Congressional Hotel 
Washington, D.C. 



Harry H. Bell 

U. N. Conference on Trade & Development 

Geneva, Switzerland 

Reynold Bennett 

Director of Science & Technology 
National Association of Manufacturers 
Washington, D.C. 

Milton A. Berger 

Bureau of International Commerce 
Department of Commerce 
Washington, D.C. 

Dr. loseph S. Berliner 
Department of Economics 
Brandeis University 
Waltham, Mass. 



Saul Baron 

Bureau of International Commerce 
Department of Commerce 
Washington, D.C. 

Alfred W. Barth 
Executive Vice President 
The Chase Manhattan Bank 
New York, N.Y. 

Dr. A. Allan Bates 

National Bureau of Standards 

Washington, D.C. 

Joseph W. Barr 
Under Secretary 
Department of the Treasury 
Washington, D.C. 

Norman E. Bateson, Vice President 
Pullman-Standard Division 
Pullman Incorporated 
Chicago, 111. 

Dr. Charles W. Beckett 
National Bureau of Standards 
Washington, D.C. 

David Z. Beckler 

Technical Assistant to the Director 
Office of Science & Technology 
Washington, D.C. 

George E. Beggs, Jr., President 
Leeds & Northrup Company 
Philadelphia, Pa. 



Samir K. Bhatia 
World Bank 
Washington, D.C. 

Dr. Bruce H. Billings 
Vice President 
Aerospace Corporation 
Los Angeles, California 

Bascom W. Birmingham 
National Bureau of Standards 
Boulder, Colorado 

Slator Blackiston, Jr. 
American Embassy 
Cairo, U. A. R. 

Dr. Edward Blum 

Department of Chemical Engineering 

Princeton University 

Princeton, N.J. 

Dr. Marcello Boldrini, President 
Ente Nazionale Idrocarburi 
Rome, Italy 

Dr. C. F. Bona, Director 
Central Research Laboratories 
FIAT 
Torino, Italy 

Rod Borum, Administrator. . 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 



Dr. S. J. Begun, Vice President 
Clevite Corporation 
Cleveland, Ohio 



R. M. Boudeman, Vice President 
The UpJohn Company 
Kalamazoo, Michigan 



146 



Pierre Bourguignon 

Special Advisor to the President 

Commission of the European Economic Community 

Brussels, Belgium 

Dean Bowman 

Autonetics Division 

North American Aviation, Inc. 

Anaheim, Calif. 

Eugene M. Braderman 

Deputy Assistant Secretary 

Commercial Affairs & Business Activities 

Department of State 

Washington, D.C. 

Dr. Edward L. Brady 
National Bureau of Standards 
Washington, D.C. 

G. E. Branscomb, President 
Systems Development Division 
IBM Corporation 
White Plains, N.Y. 

Dr. Lewis E. Branscomb 
National Bureau of Standards 
Boulder, Colorado 

Edward J. Brenner 
Commissioner of Patents 
Patent Office 

Department of Commerce 
Washington, D.C. 

Dr. F. Cecil Brenner 
National Bureau of Standards 
Washington, D.C. 

Leonard M. Brenner 
Atomic Energy Commission 
Germantown, Md. 

Dr. Robert Brenner 

Special Asst. to the Under Secretary for Transportation 

Department of Commerce 

Washington, D.C. 

Dr. Andrew F. Brimmer 
Federal Reserve System 
Washington, D.C. 

Dr. Alfred Brown, President 
Celanese Research Company 
Summit, N.J. 

Dr. S. H. Browne 

Lockheed Aircraft Corporation 

Washington, D.C. 

Corwin Brumley, Vice President 
Bausch & Lomb, Inc. 
Rochester, N.Y. 



Meade Brunet, Vice President 
Radio Corporation of America 
Mendham, N.J. 

Stanley Buckland 
Control Data Corporation 
Rockville, Md. 

Robert F. Burnett 
6322 Alberta Street 
Springfield, Va. 

Dr. Alis J. Buselli, Vice President 
Research and Technology 
Mobil Oil Corporation 
New York, N.Y. 

Edward A. Butler 
Maritime Administration 
Department of Commerce 
Washington, D.C. 

J. A. Caffiaux, Manager 
Engineering Department 
Electronic Industries Association 
Washington, D.C. 

Julius Cahn 

Assistant to the Vice President 
The White House 
Washington, D.C. 

Philip A. Calabrese 

Environmental Science Services Administration 

Department of Commerce 

Rockville, Md. 

Dr. Edward W. Cannon 
National Bureau of Standards 
Washington, D.C. 

Dr. William M. Capron 
Brookings Institution 
Washington, D.C. 

E. Finley Carter 

Consultant, Stanford Research Institute 

Portola Valley, Calif. 

Professor H. B. G. Casimir 
Director of Research Laboratories 
N. V. Philips Industries 
Eindhoven, The Netherlands 

Leo Castaldi 

IBM World Trade Corporation 

Washington, D.C. 

Tomas Chavarri 

First Secretary, Economic Affairs 
Spanish Embassy 
Washington, D.C. 



147 



Professor Hollis B. Chenery 
Department of Economics 
Harvard University 
Cambridge, Mass. 



James F. Collins 

Deputy Assistant Secretary for Domestic Business Policy 

Department of Commerce 

Washington, D.C. 



R. H. Cherry 

Director of Research & Development 
Research & Development Center 
North Wales, Pa. 

Harry E. Chesebrough, President 
USA Standards Institute 
New York, N.Y. 

Dr. Herman I. Chinn 
American Embassy 
Tehran, Iran 

Gordon Christenson 
Asst. General Counsel 
Department of Commerce 
Washington. D.C. 

Walter A. Chudsen 

Center for Industrial Development 

United Nations 

New York, N.Y. 

Llewellyn Clague 
Business International 
New York, N.Y. 

Dr. Amando Clemente 

National Research Council of the Philippines 

University of the Philippines 

Quezon City, Philippines 

V. Clermont 

Director General 

Association Francaise de Normalisation 

Paris, France 

Dayton H. Clewell, Senior Vice President 
Mobil Oil Corporation 
New York, N.Y. 

Dr. Norman D. Coggeshall 

Gulf Research & Development Company 

Pittsburgh, Pa. 



Dr. Gerhard Colm 

National Planning Association 

Washington, D.C. 

Dr. E. U. Condon 
Department of Physics 
University of Colorado 
Boulder, Colorado 

John T. Connor 
Secretary of Commerce 
Washington, D.C. 

Dr. Richard K. Cook 

Environmental Science Services Administration 

Department of Commerce 

Rockville, Md. 

Dr. Denis A. Cooper 

Small Business Administration 

Washington, D.C. 

Professor Richard N. Cooper 
Department of Economics 
Yale University 
New Haven, Conn. 

P. Willard Crane, Vice President 
The Cincinnati Milling Machine Co. 
Cincinnati, Ohio 

Dr. Paul C. Cross, President 
Mellon Institute 
Pittsburgh, Pa. 

A. A. dimming 
Chairman of the Board 
Union Carbide Canada Ltd. 
Toronto, Canada 

Robert F. Dale 
509 Beaumont Road 
Silver Spring, Md. 

Earl C. Daum, General Manager 

General Motors Overseas Operations Division 

New York, N.Y. 



Nathan Cohn 

Vice President for Technical Affairs 
Leeds & Northrup Company 
Philadelphia, Pa. 



Dr. Henry David, Head 
Office of Science Research Planning 
National Science Foundation 
Washington, D.C. 



Thomas P. Collier 

Thomas Collier & Associates 

Los Angeles, Calif. 



William R. Davies 
Worthington Corporation 
Washington, D.C. 



148 



John V. Deaver, Vice President 
Economic Research 
The Chase Manhattan Bank 
New York, N.Y. 

Peter R. DeBruyn 

National Bureau of Standards 

Washington, D.C. 

Wilfred F. Declercq 
American Embassy 
Belgrade, Yugoslavia 

Dr. Paulo De Goes 
Science Attache 
Brazilian Embassy 
Washington, D.C. 

Dr. Peter T. Demos 

Massachusetts Institute of Technology 

Cambridge, Mass. 

Charley M. Denton 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 

Daniel V. DeSimone 
National Bureau of Standards 
Washington, D.C. 

Dr. John H. Dessauer, Vice President 
Xerox Corporation 
Rochester, N.Y. 

Edward W. Doherty 
Policy Planning Council 
Department of State 
Washington, D.C. 

Robert B. Dollison 
Department of Commerce 
Washington, D.C. 

Myron G. Domsitz 

National Bureau of Standards 

Washington, D.C. 

Hugh Donaghue 
Assistant to the President 
Control Data Corporation 
Rockville, Md. 

Walter Dowling, Director General 
The Atlantic Institute 
Boulogne-sur-Seine, France 



Carroll Downey 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 

Alan Drew, President, International Marketing 
Friden Inc. 
New York, N.Y. 

Miss Maryanne Dulansey 
Office of the Foreign Secretary 
National Academy of Sciences 
Washington, D.C. 

John P. Eberhard, Director 
Institute for Applied Technology 
National Bureau of Standards 
Washington, D.C. 

F. W. Edwards 

Vice President, International Marketing 
Standard Kollsman Industries 
Melrose Park, 111. 

Dr. Churchill Eisenhart 
National Bureau of Standards 
Washington, D.C. 

Julian Engel 

Office of the Foreign Secretary 
National Academy of Sciences — 
National Research Council 
Washington, D.C. 

Dr. Elmer Engstrom, President 
Radio Corporation of America 
New York, N.Y. 

Fred C. Ewert 
Deere & Company 
Moline, 111. 

B. Eyal-Josyk 
Embassy of Israel 
Washington, D.C. 

Allen J. Farrar 

National Bureau of Standards 

Washington, D.C. 

Mark C. Feer 

Deputy Assistant Secretary for Financial Policy 

Department of State 

Washington, D.C. 

Dr. Robert E. Ferguson 
National Bureau of Standards 
Washington, D.C. 

Georges Feme 

O.E.C.D. Fellow 

c/o National Science Foundation 

Washington, D.C. 



149 



Irwin Fine 

Bureau of International Commerce 
Department of Commerce 
Washington, D.C. 



Dr. Edwin A. Gee 

Director of Development Department 
E. I. du Pont de Nemours & Co., Inc. 
Wilmington, Delaware 



Leslie S. Fletcher 

American Society of Tool & Mfg. Engineers 

Dearborn, Mich. 



Mrs. Frances M. Geiger 
National Planning Association 
Washington, D.C. 



Dr. Rene Foch 

Director of External Relations 

EURATOM 

Brussels, Belgium 



J. Mishell George 
Bureau of International Commerce 
Department of Commerce 
Washington, D.C. 



G. A. Fowles 

Vice President, Marketing 

B. F. Goodrich Chemical Company 

Cleveland, Ohio 



Francis J. Gleason 

Vice President, International Operations 

Schering Corporation 

Bloomfield, N.J. 



Dr. Daniel Frerejacque 
Scientific Attache 
Embassy of France 
Washington, D.C. 



Seymour S. Goodman 
INR/RES 

Department of State 
Washington, D.C. 



Dr. Franz Froschmaier 
European Economic Community 
Washington, D.C. 



Dr. George S. Gordon 
National Bureau of Standards 
Washington, D.C. 



Arnold W. Fruitkin 

Asst. Administrator, International Affairs 
National Aeronautics & Space Administration 
Washington, D.C. 



G. S. Gouri 

Center for Industrial Development 

United Nations 

New York, N.Y. 



Bernard M. Fry 

National Bureau of Standards 

Washington, D.C. 

Dr. Donald L. Fuller 
American Embassy 
New Delhi, India 

Dr. Herbert Fusfeld 
Research Director 
Kennecott Copper Corporation 
New York, N.Y. 



Harold Graham 

Pan American World Airways, Inc. 

New York, N.Y. 

Hylton Graham 

National Bureau of Standards 

Washington, D.C. 

R. E. Graham, Executive Vice President 

Owens-Illinois 

Toledo, Ohio 



Sydney R. Gaarder 
Atomic Energy Commission 
Germantown, Md. 

Dr. Oswald H. Ganley 

International Scientific & Technical Affairs 

Department of State 

Washington, D.C. 

Arthur Garel 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 



Nils L. Gram 
Scientific Attache 
Embassy of Norway 
Washington, D.C. 

James A. Gray, Executive Vice President 
National Machine Tool Buildings Assn. 
Washington, D.C. 

Dr. Melville E. Green 
National Bureau of Standards 
Washington, D.C. 



150 



Martin Greenspan 

National Bureau of Standards 

Washington, D.C. 

John C. Griffith 

Office of International Economic & Social Affairs 

Department of State 

Washington, D.C. 

N. K. Grigoriev, Director 
Technological Division, 

Centre for Industrial Development 
United Nations 
New York, N.Y. 

Ze'ev Grodecki, President 

Israel-America Chamber of Commerce and Industry Ltd. 

Tel-Aviv, Israel 

Paul J. Grogan, Director 
Office of State Technical Services 
Department of Commerce 
Washington, D.C. 



K. A. Anker Hansen 
Scientific Counselor 
Embassy of Denmark 
Washington, D.C. 

Robert D. Harrington 
122 Calvert Road 
Rockville, Md. 

Dr. Milton Harris 
3300 Whitehaven Street 
Washington, D.C. 

S. T. Harris, Vice President 
Texas Instruments, Inc. 
Dallas, Texas 

Dr. William J. Harris 
Assistant to the Vice President 
Battelle Memorial Institute 
Washington, D.C. 

G. M. Hartley, Managing Director 
Cooper Development Association 
New York, N.Y. 



Elmer S. Groo, Vice President 
IBM World Trade Corporation 
New York, N.Y. 



William Hartley 
Science Attache 
Australian Embassy 
Washington, D.C. 



A. C. Grove 

USA Standards Institute 

New York, N.Y. 



A. Hass 

Schering Corporation 

Bloomfield, N.J. 



Louis Groven 
Scientific Counselor 
Embassy of Belgium 
Washington, D.C. 



Sanjivi Guhan 
First Secretary of Economics 
Indian Embassy 
Washington, D.C. 



Fayvel Hadass, Director 

The Standards Institution of Israel 

Tel-Aviv, Israel 



Jerrier A. Haddad, Director 

of Technology of Engineering Systems 
International Business Machines Corp. 
Armonk, N.Y. 



Walter Hahn 

Environmental Science Services Admin. 
Department of Commerce 
Rockville, Md. 



George T. Hayes 

Assistant Manager-Development 

Bechtel Corporation 

San Francisco, Calif. 

H. E. Heilman 

Vice President-International 

B. F. Goodrich 

Akron, Ohio 

J. M. Heldack 

North American Aviation, Inc. 

El Segundo, Calif. 

George Herbert, President 
Research Triangle Institute 
Research Triangle Park, N.C. 

M. P. Hershey, Technical Director 
Firestone Tire & Rubber Company 
Akron, Ohio 

R. D. Higgins 

Bell & Howell Company 

Chicago, Illinois 



151 



John Hight, Executive Director 
Committee for a National Trade Policy 
Washington, DC. 

John Hill 

Office of Atlantic Political Affairs 
Department of State 
Washington, D.C. 

Dr. James Hillier, Vice President 
RCA Laboratories 
David Sarnoff Research Center 
Princeton, N.J. 

Walter R. Hinchman 

Office of Telecommunications Management 
Executive Office of the President 
Washington, D.C. 

W. C. Hittinger 

Bell Communications, Inc. 

Washington, D.C. 

Dr. Robert B. Hobbs 
National Bureau of Standards 
Washington, D.C. 

Dr. C. A. J. Hoeve 

National Bureau of Standards 
Washington. D.C. 



Miss Vada Horsch 

Program & Policy Executive, International Affairs 

Department 
National Association of Manufacturers 
New York, N.Y. 

Dr. L. E. Howlett 

Director, Division of Applied Physics 
National Research Council 
Ottawa, Ontario, Canada 

Dr. Ralph P. Hudson 
National Bureau of Standards 
Washington, D.C. 

Commander Wesley V. Hull 
Environmental Science Services Administration 
Department of Commerce 
Rockville, Md. 

James K. Huntoon 

Environmental Science Services Administration 

Department of Commerce 

Rockville, Md. 

Dr. Robert D. Huntoon, Director 
Institute for Basic Standards 
National Bureau of Standards 
Washington, D.C. 



Frank N. Hoffman 

United Steelworkers of America 

Washington. D.C. 

Dr. John D. Hoffman 
National Bureau of Standards 
Washington, D.C. 

E. S. Hogland, Chairman 

National Foreign Trade Council, Inc. 

New York, N.Y. 

Dr. J. Herbert Hollomon 

Assistant Secretary for Science & Technology 

Department of Commerce 

Washington, D.C. 

Albert Louis Horley 
1845 Harvard Street N.W. 
Washington, D.C. 

Dr. Donald F. Hornig 

Special Assistant to the President for Science 

and Technology 
The White House 
Washington, D.C. 



Morton Hyman 

International Business Machines Corp. 

Gaithersburg, Md. 

Dr. Horace S. Isbell 

National Bureau of Standards 

Washington, D.C. 

F. H. Jabos 

International Economic Policy Association 

Washington, D.C. 

Dr. Christian Jacobaeus 

Executive Vice President for Technique 

L. M. Ericsson 

Stockholm, Sweden 

S. C. Jem, Vice President 
Chinese Petroleum Corporation 
New York, N.Y. 

Malcolm W. Jensen 
National Bureau of Standards 
Washington, D.C. 






Dr. Emanuel Horowitz 
National Bureau of Standards 
Washington, D.C. 



Dr. Everett R. Johnson 
National Bureau of Standards 
Washington, D.C. 



152 



Harry W. Jones 

Vice President and Assistant to the President 
Westinghouse Electric International Co. 
New York, N.Y. 

Robert T. Jones 

Vice President, Autonetics Division 
North American Aviation, Inc. 
Anaheim, Calif. 

Dr. Deane B. Judd 

National Bureau of Standards 

Washington, D.C. 

Leonard Kamsky, Head 
Business Economics Department 
W. R. Grace & Co. 
New York, N.Y. 

Morris Kaplan, Technical Director 
Consumers Union 
Mount Vernon, N.Y. 

Atilia Karaosmanoglu, Economist 
World Bank 
Washington, D.C. 

Walter Katchnig 

Deputy Assistant Secretary for International Organizations 

Department of State 

Washington, D.C. 

Jacob E. Katz 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 



Dr. Gordon Kline 
331 So. Palmway 
Lake Worth, Florida 

Dr. Antonie Knoppers, President 
Merck Sharp & Dohme International 
New York, N.Y. 

William T. Knox 

Office of Science & Technology 

Washington, D.C. 

Dr. H. William Koch 
National Bureau of Standards 
Washington, D.C. 

K. L. Kollar 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 

Paul H. Kratz 

National Bureau of Standtrds 

Washington, D.C. 

Louis C. Krauthoff 

Office of the Special Representative for 

Trade Negotiations 
Washington, D.C. 

Richard T. Kropf, President 
Belding Hemingway Company, Inc. 
New York, N.Y. 

Dr. Juergen Kuczynski 
German Academy of Science 
West Berlin, Germany 



Michael G. Kelakos 
American Embassy 
Tel-Aviv, Israel 



Miss Barbara M. Kugel, Adviser 
Economic & Social Affairs 
U. S. Mission to the United Nations 
New York, N.Y. 



Dr. M. Kersten, President 
Physikalisch-Technische Bundesanstalt 
Braunschweig, Germany 



Dr. Lawrence M. Kushner 
National Bureau of Standards 
Washington, D.C. 



Dr. Karl G. Kessler 
National Bureau of Standards 
Washington, D.C. 



Ralph A. Lamm 
Bendix Corporation 
North Hollywood, Calif. 



I. S. Khranston 
Soviet Embassy 
Washington, D.C. 



Francis L. LaQue, Vice President 
International Nickel Company 
New York, N.Y. 



Edward R. Killam 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 



William S. Lawson 
Patent Office 

Department of Commerce 
Washington, D.C. 



153 



Dr. Cristino Lazatin, Science Attache 
Embassy of the Philippines 
Washington, DC. 



Willis S. MacLeod 
Federal Supply Service 
Washington, D.C. 



Richard S. Leghorn, President 
DASA Corporation 
Andover, Mass. 

P. H. Leman, Executive Vice President 
Aluminum Company of Canada Ltd. 
Montreal, Quebec, Canada 

James Leonard 
Bureau of Public Roads 
Department of Commerce 
Washington, D.C. 



Sam L. G. Maggio 
Division of Language Services 
Department of State 
Washington, D.C. 

Dr. Robert Major, Director 

Royal Norwegian Council for Scientific & 

Industrial Research 
Oslo, Norway 

Dr. Canuto G. Manuel, Commissioner 
National Institute of Science & Technology 
Manila, Philippines 



Bernard M. Levin 

National Bureau of Standards 

Washington, D.C. 



The Rt. Hon. Ernest Marples 
Member of Parliament 
London, England 



Charles A. Lewis 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 

Dr. Halvard Liander 
Executive Vice President 
ASEA 
Stockholm. Sweden 

Dr. David R. Lide, Jr. 
National Bureau of Standards 
Washington, D.C. 

Robert Liimatainen, Science Attache 
Department of State 
Washington, D.C. 

Walter L. Lingle, Jr. 
Executive Vice President 
The Procter & Gamble Company 
Cincinnati, Ohio 

Arnold Lissance, Interpreter 
Division of Language Services 
Department of State 
Washington, D.C. 

Varnum D. Ludington 
Vice President of Research 
General Foods Corporation 
White Plains, N.Y. 



Dr. Ladislaus L. Marton 
National Bureau of Standards 
Washington, D.C. 

Dr. Oscar Marzke, Vice President 
United States Steel Corporation 
Pittsburgh, Pa. 

Dr. George J. Maslach, Dean 
College of Engineering 
University of California 
Berkeley, Calif. 

E. O. Mattocks, Director 
Division of Science & Technology 
American Petroleum Institute 
New York, N.Y. 

Mrs. Elizabeth S. May 
Export-Import Bank of Washington 
Washington, D.C. 

Dr. Clyde L. McClelland 
American Embassy 
Stockholm, Sweden 

Dr. R. J. McCubbin 

Director of Special Staff Projects, International 
Minnesota Mining & Manufacturing Co. 
St. Paul, Minn. 

Francis K. McCune, Vice President 
General Electric Company 
New York, N.Y. 



W. Stuart Lyman, Managing Director 
Cooper Development Association 
New York, N.Y. 



William Mclnerney 

Senate Small Business Committee 

Washington, D.C. 



54 



Harris Mcintosh, President 
Toledo Scale Company 
Toledo, Ohio 



Dr. Oscar Menis 

National Bureau of Standards 

Washington, DC. 



H. McKinley 
State Government 
Atlanta, Georgia 

Miss Joyce McKloskey 

Gulf South Research Institute 

Washington, D.C. 

Professor Marshall McLuhan, Director 
Center for Culture & Technology 
University of Toronto 
Toronto, Canada 

Thomas R. McMullen 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 

Alvin G. McNish 

National Bureau of Standards 

Washington, D.C. 

Lawrence C. McQuade 
Assistant to the Secretary 
Department of Commerce 
Washington, D.C. 

C. J. McQuillan 

International Telephone & Telegraph Co. 
New York, N.Y. 

Thomas W. Mears 

National Bureau of Standards 

Washington, D.C. 

D. A. Meeker, Chairman of the Board 
Hobart Manufacturing Company 
Troy, Ohio 

Dr. W. Wayne Meinke 
National Bureau of Standards 
Washington, D.C. 

Alejandro Melchor, Deputy Director General 
Presidential Economic Staff 
Office of the President of the Philippines 
Manila, Philippines 

Edward Melton, Director of D.C. Affairs 
Clevite Corporation 
Washington, D.C. 

Dr. Alan Mencher 
American Embassy 
London, England 



Dr. M. Eugene Merchant 
Director of Scientific Research 
The Cincinnati Milling Machine Co. 
Cincinnati, Ohio 

Frank Meya 

The Taft-Pierce Mfg. Co. 

Woonsocket, R.I. 

Rauer H. Meyer 

Bureau of International Commerce 
Department of Commerce 
Washington, D.C. 

Rodney W. Meyer, Manager 
Components & Products Marketing 
Hughes International 
Culver City, Calif. 

Michael Michaelis, Manager 
Arthur D. Little, Inc. 
Washington, D.C. 

Gene Mikols 

Electric Machinery Mfg. Co. 

Washington, D.C. 

I. J. Minett, Group Vice President 
International Operations 
Chrysler Corporation 
Detroit, Mich. 

G. Franklin Montgomery 
National Bureau of Standards 
Washington, D.C. 

Ugo Morabito 
Commercial Minister 
Italian Embassy 
Washington, D. C. 

Dr. Richard S. Morse 
Alfred P. Sloan School of Management 
Massachusetts Institute of Technology 
Cambridge, Mass. 

Dr. J. A. Morton, Vice President 
Bell Telephone Laboratories, Inc. 
Murray Hill, N.J. 

George B. Mosely, Director 
Corporate Marketing 
Champion Papers, Inc. 
Chicago, 111. 



256-707 0-67— 11 



155 



Miss Mary Moss 

Center for Industrial Development 

United Nations 

New York, N.Y. 

Dr. Carl O. Muehlhause 
National Bureau of Standards 
Washington, D.C. 

Howard C. Multer 
Stanley Tool Division 
Stanley Works 
New Britain, Conn. 

Costin Murgescu, President 

The Academy of the Romanian People's Republic 

Bucharest, Romania 

Henry Myers, Office of Atlantic Political Affairs 
Department of State 
Washington, D.C. 

Mr. Sumner Myers 

National Planning Association 

Washington, D.C. 

Stanley Nehmer, 

Deputy Assistant Secretary for Resources 

Department of Commerce 

Washington, D.C. 

N. D. Neureiter 
American Embassy 
Bonn, Germany 

Dr. Morris Newman 
National Bureau of Standards 
Washington, D.C. 

Nicolae Nicolae 

Deputy Minister of Foreign Trade 

Bucharest, Romania 



Robert M. Norris, President 
National Foreign Trade Council. 
New York, N.Y. 



Inc. 



Gerald O'Brien 

Assistant Commissioner of Patents 

Patent Office 

Department of Commerce 

Washington, D.C. 

Dr. Edward R. O'Connor 

Office of Under Secretary of Commerce for Transportation 

Department of Commerce 

Washington, D.C. 



Carl Oechsle 

Macon Smith & Company 

Springfield, Mass. 

B. H. Oehlert 

The Coca Cola Export Corp. 

New York, N.Y. 

Kenneth Olsen, President 
Digital Equipment Corp. 
Maynard, Mass. 

Joseph Oppenheim, Director 
Raytheon International 
Raytheon Company 
Lexington, Mass. 

Donald Orr, Vice President, Operations — International 

Division, UNIVAC 
Sperry Rand Corporation 
Philadelphia, Pa. 

Dr. Hansjorg Oser 

National Bureau of Standards 

Washington, D.C. 

Nathan Ostroff 
Chairman, Appeals Board 
Department of Commerce 
Washington, D.C. 

Dr. Jose M. Otero, President 
Junta de Energia Nuclear 
Madrid, Spain 

James M. Owens 

Business & Defense Services Administration 

Department of Commerce 

Washington, D.C. 

Dr. Chester H. Page 
National Bureau of Standards 
Washington, D.C. 

L. Palacios 

Centro Nacional de Energia Nuclear 

Madrid, Spain 

Max Palevsky, President 
Scientific Data Systems 
Santa Monica, Calif. 

A. R. Parsons 
Honeywell, Inc. 
Minneapolis, Minn. 



P. T. O'Day 

National Bureau of Standards 

Washington, D.C. 



Dr. Elio Passaglia 

National Bureau of Standards 

Washington, D.C. 



156 



i 



Thomas H. Pearce, President 
National Standard Company 
Niles, Mich. 

Robert W. Pearson, Chairman 
P-W Industries, Inc. 
Philadelphia, Pa. 

Dr. Aurelio Peccei, Chief Executive 
Ing. C. Olivetti & C, S.p.A. 
Ivrea, Italy 

Dean Courtland D. Perkins, Chairman 
Aeronautical Engineering Dept. 
Princeton University 
Princeton, N.J. 

R. L. Perry, Economics Department 
The Rand Corporation 
Santa Monica, Calif. 

C. M. Peterson 

Vice President, Overseas Marketing 
John Deere & Company 
Moline, Illinois 

Peter G. Peterson, President 
Bell & Howell Company 
Chicago, Illinois 

Donald L. Peyton 
Managing Director & Secretary 
USA Standards Institute 
New York, N.Y. 



Herman Pollack 

Director of International Scientific & Technological Affairs 

Department of State 

Washington, D.C. 

Reuben Pomerantz 

Special Assistant to the Assistant Secretary for 

Science & Technology 
Department of Commerce 
Washington, D.C. 

Gaston Ponsart 
Delegue du Comite Franc 
Dollar en Amerique du Nord 
Washington, D.C. 

Edward Pope, Special Projects Manager 
General Foods Corporation 
White Plains, N.Y. 

Robert C. Powell 

National Bureau of Standards 

Washington, D.C. 

Dr. S. L. Pundsak, Director for Basic Research 
Johns-Manville Research & Engineering Center 
Manville, N.J. 

Dr. Stephen T. Quigley 
American Chemical Society 
Washington, D.C. 

Professor James Bryan Quinn 
Dartmouth College 
Hanover, N.H. 



Christopher Phillips, President 

U. S. Council of the International Chamber of Commerce 

New York, N.Y. 



Jacob Rabinow, President 
Rabinow Electronics, Inc. 
Rockville, Md. 



Professor F. Picard 
Director for Research 
Regie Nationale Renault 
Billancourt/Seine, France 

Dr. Emanuel R. Piore, Vice President 
International Business Machines Corp. 
Armonk, N.Y. 

Dr. Edgar L. Piret 
American Embassy 
Paris, France 



Valeri A. Racheyev, Scientific Counselor 
Soviet Embassy 
Washington, D.C. 

Remus Radulet, Vice President 
National Council for Scientific Research 
Bucharest, Romania 

K. S. Sundara Rajan 
Minister of Economics 
Indian Embassy 
Washington, D.C. 



Dr. Sergio Pizzoni-Ardemani 
Special Assistant to the President 
Olivetti-Underwood Corporation 
New York, N.Y. 



M. G. Raja Ram 
Minister, Education and Culture 
Indian Embassy 
Washington, D.C. 



Leon Podolsky 

Sprague Electric Company 

North Adams, Mass. 



Dr. Walter Ramberg 
American Embassy 
Rome, Italy 



157 



Professor V. K. R. V. Rao 

Member, Planning Commission 
Government of India 
New Delhi, India 



Stephen H. Rogers 

European Community & Atlantic Political-Economic Affairs 

Department of State 

Washington, D.C. 



James B. Rather, Jr. 
Research Department 
Mobil Oil Corporation 
New York, N.Y. 



Jean-Jacques Rolland 
Secretary, Scientific Affairs 
Embassy of Switzerland 
Washington, D.C. 



Hugh L. Ray 

Sears Development Laboratories 

Chicago, Illinois 

Murray Rennert 

Bureau of International Commerce 
Department of Commerce 
Washington, D.C. 

Prof. L. Rey, Scientific Adviser 
Nestle Alimentana S. A. 
Vevey, Switzerland 



Dr. Ludwig Rosenstein 

Consultant, Tech. & Engineering Chemistry 

San Francisco, Calif. 

Dr. Henry M. Rosenstock 
National Bureau of Standards 
Washington, D.C. 

Geoffrey Rowe 
Standardization Officer 
Electrical & Electronic Branch 
Department of Industry 
Ottawa, Ontario, Canada 



John E. Reynolds 
Board of Governors 
Federal Reserve System 
Washington, D.C. 

J. W. Richards, Director 
Technical Analysis Office 
Ford Motor Company 
Dearborn, Mich. 

Philip Ridley 
British Embassy 
Washington, D.C. 

R. W. Ritzmann 

Atomic Energy Commission 

Germantown, Md. 

Paul H. Robbins, Executive Director 
National Society of Professional Engineers 
Washington, D.C. 

Dr. R. O. Roblin, Vice President 
American Cyanamid Company 
Wayne, N.J. 

Dr. Arthur Roe, Head 
Office of International Science Activities 
National Science Foundation 
Washington, D.C. 



M. L. Ruppert, General Secretary 
International Electrotechnical Commission 
Geneva, Switzerland 

James V. Ryan 

National Bureau of Standards 

Washington, D.C. 

L. V. Sabelnikor 
Soviet Embassy 
Washington, D.C. 

Dr. Juan Salcedo, Jr., Chairman 

Philippine National Science Development Board 

Manila, Philippines 

Soedjana M. Sapie 

National Bureau of Standards 

Washington, D.C. 

Dr. Mario Scalera 

American Cyanamid Company 

Wayne, N.J. 

Dr. Reinaldo Scarpetta 

Dean, Division of Social & Economic Sciences 

Universidad del Valle 

Cali, Columbia 

R. A. Schatzel 

1406 N. George Street 

Rome, New York 









Dr. Paolo Rogers 

Director for International Affairs 

Olivetti Company 

Rome, Italy 



E. E. Schnellbacher, Assistant Director 
Bureau of International Commerce 
Department of Commerce 
Washington, D.C. 



158 






Dr. I. C. Schoonover 
Deputy Director 
National Bureau of Standards 
Washington, DC. 



H. W. Shoemaker 
Manager, Technical Information 
General Electric Company 
Washington, D.C. 



Dr. Galen B. Schubauer 
National Bureau of Sttndards 
Washington, D.C. 

Professor Andrew Schultz, Jr. 
Dean of Engineering 
Cornell University 
Ithaca, New York 

W. L. K. Schwarz, Industrial Economist 
Stanford Research Institute 
Washington, D.C. 

C. S. Seabring, Vice President for Research & Development 
Worthington Corporation 
Harrison, N.J. 

Francis J. Sehn, President 
Press Automation Systems 
Detroit, Michigan 

Dr. Frederick Seitz, President 

National Academy of Sciences — National Research Council 

Washington, D.C. 

Dr. Giuseppe Sfligiotti 
Assistant to the President 
Ente Nazionale Idrocarburi 
Rome, Italy 

C. H. Sharpston, Secretary-General 
International Organization for Standardization 
Geneva, Switzerland 

John F. Shaw 

Office of the Special Representative for Trade Negotiations 

Washington, D.C. 

Dr. Reza Shayegan, Director 

Institute of Standards & Industrial Research of Iran-Isiri 

Tehran, Iran 

Dr. Leonard S. Sheingold, Vice President 
Sylvania Electronics Systems 
Waltham, Mass. 

Dr. Chalmers W. Sherwin, Deputy Assistant Secretary 

for Science & Technology 
Department of Commerce 
Washington, D.C. 



Dr. Ronald Gordon Shuttleworth 
Scientific Attache 
Embassy of South Africa 
Washington, D.C. 

Clarence S. Siegel, Deputy Director 
Office of International Regional Economics 
Department of Commerce 
Washington, D.C. 

Alessandro Silj 
Harvard University 
Cambridge, Mass. 

Dr. Shirleigh Silverman 
National Bureau of Standards 
Washington, D.C. 

Richard W. Simon, Vice President 
United States Steel 
Pittsburgh, Pa. 

Robert E. Simpson, Director 

Office of International Regional Economics 

Department of Commerce 

Washington, D.C. 

Dr. O. Simpson, Deputy Director 
National Physical Laboratory 
Teddington, Middlesex, England 

Dr. Andre C. Simonpietri 
U. S. Scientific Attache 
American Embassy 
Rio de Janiero, Brazil 

James Simsarian 

Office of International Economic and Social Affairs 

Department of State 

Washington, D.C. 

Paul Sithi-Amnuay, Vice President 
Bangkok Bank Ltd. 
New York, N.Y. 

Dr. Charlotte M. Sitterly 
National Bureau of Standards 
Washington, D.C. 



John H. Shoaf, Director 

U. S. Department of Commerce Field Office 

Santurce, Puerto Rico 



George Sivac 
Embassy of France 
Washington, D.C. 



159 



L. E. Smart, Jr., Vice President 
International Operations 
Bendix Corporation 
Detroit, Michigan 



William Stibravy, Director 

Office of International Economic & Social Affairs 

Department of State 

Washington, D.C. 



Dean Smith, Director 

Office of Publications & Information 

Bureau of Domestic & International Business 

Department of Commerce 

Washington, D.C. 

Edward D. Smith, Director 

Business Services and Head, Foreign Trade Division 

Department of Commerce 

Harrisburg, Pa. 

Edward G. Smith 
Business & Defense Services Admin. 
Department of Commerce 
Washington, D.C. 

General Edmundo Mecedo Soares 
Counsel for Latin America, Inc. 
Rio de Janiero, Brazil 

Anthony M. Solomon 

Assistant Secretary for Economic Affairs 

Department of State 

Washington, D.C. 



Dr. Daniel R. Stull, Director 
Thermal Research Laboratory 
The Dow Chemical Company 
Midland, Michigan 

Christopher A. Squire 
American Embassy 
Moscow, U. S. S. R. 

Professor Ronald A. Sterkle 
University of Illinois 
Champaign, Illinois 

Charles W. Stewart, President 
Machinery & Allied Products Institute 
Washington, D.C. 

Rene Stinglhamber, Head, Technical Department 

Fabrimetal 

Brussels, Belgium 

Dr. Herbert Stussig, President 

Arbeitsgemeinschaft Industrieller Forschungsvereinigungen 

Cologne, West Germany 



Dr. Howard E. Sorrows 
National Bureau of Standards 
Washington, D.C. 



Faruk A. Sunter 

President, Turkish Standards Institution 

Ankara, Turkey 



Dr. L. R. W. Soutendijk 

Brown Brothers Harriman & Company 

New York, N.Y. 



R. H. Swanson 

U. S. Rubber Company 

New York, N.Y. 



Dr. George Sponsler 
Director for Exploratory Studies 
International Business Machines Corp. 
Gaithersburg, Md. 

Dr. C. E. Starr, Vice President 
Esso Research & Engineering Co. 
Linden, N.J. 



I. B. Tauter 
Romanian Embassy 
Washington, D.C. 

Dr. Gordon K. Teal, Director 
Institute for Materials Research 
National Bureau of Standards 
Washington, D.C. 



Hoyt Steele, Vice President 
International General Electric Exports 
New York, N.Y. 



Walter D. Thomas 
FMC Corporation 
San Jose, Calif. 



Joshua Stern 

National Bureau of Standards 

Washington, D.C. 

Robert L. Stern 

Chief, Office of Industrial Services 
National Bureau of Standards 
Washington, D.C. 



Alexander B. Trowbridge 

Assistant Secretary for Domestic and International Business 

Department of Commerce 

Washington, D.C. 

Roy P. Trowbridge, Vice President 
General Motors Technical Center 
Warren, Mich. 



160 



Dr. A. C. Tugado 

Senate Committee on Scientific Advancement 

Philippine Congress 

Manila, Philippines 

Dr. Howard Turner, President 
Turner Construction Company 
New York, N.Y. 

Alexandru Ungur 
Romanian Embassy 
Washington, D.C. 

Dr. Pierre Uri, Director of Studies 
Atlantic Institute 
Paris, France 

Dr. Harold Vagtborg, Executive Chairman 
Board of Trustees 
Southwest Research Center 
San Antonio, Texas 

Heimon van Blankenstein 
Economic Minister 
Embassy of The Netherlands 
Washington, D.C. 



J 



^aniele Verduani 
Directorate General for International 
> Market Affairs 
European Economic Community 
Brussels, Belgium 

Charles T. Vetter 

U. S. Information Agency 

Washington, D.C. 

Nikola Videnov, Deputy Chairman 

State Committee for Science & Technical Progress 

Bulgarian Legation 

Washington, D.C. 

Irvin V. Voltin 

National Bureau of Standards 

Washington, D.C. 

R. G. Voysey, Counselor 
British Embassy 
Washington, D.C. 

Robert S. Walleigh 

National Bureau of Standards 

Washington, D.C. 



Dr. H. M. H. A. Van der Valk 
Executive Director 
International Monetary Fund 
Washington, D.C. 

Leiton Van Nort 

Office of International Economic & Social Affairs 

Department of State 

Washington, D.C. 

A. B. VanRennes, Technical Director 
Bendix International 
New York, N.Y. 

Donald van Tuyl 

Secretary of the Committee on Technology 
U. S. Chamber of Commerce 
Washington, D.C. 

Herman C. Van Vierssen, Scientific Attache 
Embassy of The Netherlands 
Washington, D.C. 

Tibor Vasko, First Secretary 

Embassy of the Czechoslovak Socialist Republic 

Washington, D.C. 

Russell Venn, Vice President 
Humble Oil & Refinery Company 
Houston, Texas 



Dr. Merrill B. Wallenstein 
National Bureau of Standards 
Washington, D.C. 

Samuel H. Watson 
Manager, Corporate Standardizing 
Radio Corporation of America 
Camden, N.J. 

Norwood W. Watts 
Manager, International Marketing 
Philco-Ford Corporation 
Washington, D.C. 

Samuel C. Waugh, Director 
The Atlantic Council, and 
Consultant, Blaw-Knox Company 
Washington, D.C. 

Charles E. Webber 
Sun Oil Company 
Philadelphia, Pa. 

Dr. Robert T. Webber 
American Embassy 
Tokyo, Japan 

Ernest M. Weber 

Vice President for Scientific Affairs 

Charles Pfizer & Co., Inc. 

New York, N.Y. 



161 



Irving H. Weil 
Weil Brothers, Inc. 
Frederick, Md. 

Bruno Weinschel, President 
Weinschel Engineering Co., Tnc. 
Gaithersburg, Md. 

Dr. S. G. Weissberg 
National Bureau of Standards 
Washington, D.C. 

Donald S. Welshon 
International Division 
Illinois Tool Works, Inc. 
Chicago. Illinois 

George C. Wells, Vice President 
Union Carbide Corp. 
New York, N.Y. 

Dr. Edward Wenk, Executive Secretary 
National Council on Marine Resources and 

Engineering Development 
Washington. D.C. 

Dr. F. Joachim Weyl, Chief Scientist 
Office of Naval Research 
Department of the Navy 
Washington, D.C. 

Professor Ralph H. Wherry 
Dept. of Commerce & Management 
Pennsylvania State University 
University Park, Pa. 

William A. Wildhack 
National Bureau of Standards 
Washington, D.C. 

John D. Wilkes 

Agency for International Development 

Department of State 

Washington, D.C. 

Dr. William W. Williams 
American Embassy 
Bonn, Germany 

W. J. Wills, President 

The American Trade Association of New Zealand 

Wellington, New Zealand 

Bruce Wilson 

National Bureau of Standards 

Washington, D.C. 



Prof. Miguel S. Wionczek 
Center for International Affairs 
Harvard University 
Cambridge, Mass. 



John G. Wirt, Program Evaluation Staff 
Bureau of the Budget 
Washington, D.C. 

Dr. Gregory B. Wolfe, Director 
Office of Research & Analysis for the 

American Republics 
Department of State 
Washington, D.C. 

Dr. Nathan H. Woodruff 
Scientific Attache 
American Embassy 
Buenos Aires, Argentina 



Harold K. Work, Secretary 
National Academy of Engineering 
Washington, D.C. 



A. H. A. Wynn 
Head, Standards Division 
Ministry of Technology 
London, England 



Dr. Mohamed Yeganeh 
Deputy Minister of Economy 
Tehran, Iran 



Eiji Yokoyama, Executive Vice President 
Mitsubishi International Corporation 
New York, N.Y. 



Charles I. York 
Seismology Division 
Coast & Geodetic Survey 
Rockville, Md. 



Dennis R. Young 

National Bureau of Standards 

Washington, D.C. 

Bernard Zavos 

National Bureau of Standards 

Washington, D.C. 

M. Zvegintzov, Chief Planning Advisor 
Dept. of Planning & Policy Coordination 
National Research Development Corp. 
London, England 



62 



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